What Banking-as-a-Service is
Banking-as-as-Service (Baas) solutions are a growing market covered by a host of technology providers. Strickly speaking, BaaS encompasses white label banking solutions enabling clients, which can range from incumbent banks to fintechs, to offer integrated banking services, all under the umbrella of their own brands.
As a wide-ranging category of solutions, BaaS covers everything from regulatory licensing to operations. In terms of connectivity, BaaS solutions can easily integrate with third-part solutions via API to either add additional services, for example mobile banking or payments, or increase functionality of existing offerings.
Providers vary in terms of capabilities and offered products, from entities specializing in a particular segment or functionality, such as banking APIs, those focusing on banking infrastructure, i.e lending, cards, credit scoring, etc., to companies offering full-stack services. Popular players in the space include core banking platform Mambu, Solarisbank, a BaaS provider offering a range of services, and Marqeta, which provides white label card issuing and payments processing.
BaaS Benefits for Fintechs and Incumbents
BaaS has benefits for both fintechs and incumbent banks. In terms of the former, fintechs can expect faster new product launches, significantly lower upfront costs, and a path to circumvent regulatory complexities. Incumbents avail themselves of new resources and customer segments, modern customer experiences, increased operational efficiency, and, similar to fintechs, expedited new product launches.
How to Find a BaaS Partner
If companies are looking to select a BaaS partner, they should first thoroughly understand exactly what they need, consulting, for example, their business plans and taking into account existing IT capabilities alongside the broader business context and regulatory environment. Following this, they should define the scope and criteria for a potential BaaS provider to set a relevant yardstick for evaluating vendors.
Download the infographic below to learn more about the ins and outs of BaaS, including partner selection.