What is BaaS? Banking as a Service Explained

Remember when banking meant visiting a branch and talking to a teller? In 2026, banks live in our phones, and financial features appear inside products that were never banks: checkout financing, in-app wallets, instant payouts. That is Banking as a Service (BaaS) at work, and the money follows it: Fortune Business Insights values the BaaS market at $26.47 billion in 2026 and expects it to reach $108.03 billion by 2034.

With 200+ successful projects in our portfolio, the Relevant team is well-versed in fintech software development services, and we have a few things to say about BaaS. Good things, that is. When you finish reading this piece, you’ll have an idea about:

• What BaaS is
• How it works
• What you stand to gain with BaaS
• Why it’s the future, and how to be a part of it

Let’s get into it.

What is Banking as a Service?

In short, Banking as a Service (or white-label banking) is a system that allows non-bank businesses to embed financial services into their products. For example, companies that are not licensed banks may offer loans or payment services to customers by integrating digital banking into their systems. To make this possible, banks can either create their own platforms or work with third-party providers offering BaaS solutions. 

Here are some digital products that many of us use in our daily lives and that are often based on BaaS: 

• In some cases, BaaS serves as a backbone when you build a personal finance app. Betterment, a popular investing app, is an example of such an application.
• Remittance software uses BaaS technologies, too. For instance, one of the leaders in remittance, Wise (formerly known as TransferWise), has long since expanded from transfers into multi-currency accounts.
• Creating modern mortgage software and money lending apps would also be impossible without Banking as a Service. 

All these services are provided and supported by a bank but are implemented by a third party. So why is there a middleman? And don’t they need to hold a valid banking license, too? To get a clearer picture, let’s see how the model works in detail.

How does Banking as a Service work?

To have a complete BaaS experience, you usually need the following three components:

• Licensed banks
• BaaS providers
• Brands/fintechs

A bank as a license holder lends its license to a BaaS provider and grants access to its financial products. The provider communicates with the bank’s infrastructure via APIs (Application Programming Interfaces) and delivers financial solutions for fintechs to use. Those, in turn, give access to banking functionality to their end customers. 

Quite simple, isn’t it? Here is what each participant brings to the table:

• Because they are mature ecosystems and are heavily regulated, banks ensure a highly secure and organized financial structure. They also guarantee compliance with current laws in the sector and are a source of essential customer data.

• Banking as a Service providers offer a complete solution for embedding financial services into their clients’ platforms. These include:
  • User interface design
  • Products
  • Risk assessment and management tools
  • Account management
  • And more

• Fintechs integrate the BaaS functionality into their products, creating a hassle-free end-to-end customer journey.

Many banks, sensing the current digital trends, started offering their own BaaS platforms that enable direct access for fintechs and other businesses through APIs. Such an approach creates a competitive advantage for these more traditional financial institutions in a market where novel fintech startups emerge constantly.

But no matter what BaaS solution a company implements, it’s critical to ensure fintech app security at every level.

Now that we know how the system works, let’s discuss the advantages of using BaaS.

The benefits of the Banking as a Service model

The essential value of BaaS lies, of course, in its innovative digital nature. Financial operations are an inseparable part of any business, and every party involved can reap significant benefits from streamlining the process. Let’s take a closer look.

End customers

Convenience, speed, and a wide selection of payment options are only some of the perks that BaaS platforms can add to the consumer experience. Never in history have buyers been equipped with more tools for making every transaction effortless and pleasant. Virtual loan approval, for instance, turns a process that once required branch visits into a few taps.

Brands/businesses

Brands that have adopted embedded finance on their platforms are winning the loyalty of their customers and earning additional profits from these integrated financial products. They are also saving big on the infrastructure necessary to accommodate legacy banking services.

Fintechs

Fintech startups get the unique opportunity to implement their financial solutions within tight timelines, on a reasonable budget, and without having to obtain a banking license. The BaaS layer provides the necessary two-way data flow between banks and end customers.

BaaS providers

Mordor Intelligence expects the BaaS market to grow at 17.83% annually through 2031. Banking as a Service providers are set up for success due to profits from the transaction fees they collect. Not to mention the fact that the innovative solutions that TPPs create propel the entire industry forward.

Financial institutions

Banks stand to gain a lot from the adoption of BaaS. Thanks to providers’ commission fees and the added revenue streams they can tap into with this innovative strategy. Also, the positive effects of innovation can help overcome legacy issues and secure a better position in today’s competitive market. And third, the two-way flow of user data in the system allows financial institutions to gain new insights into their customers’ buying and investing habits.

Now it’s time to cover the core banking features BaaS can incorporate.

An overview of main BaaS services

It’s no surprise that Banking as a Service APIs are the heart and soul of the model. After all, the system is only as good as the solutions it offers for day-to-day operations. Established BaaS providers usually have an extensive library of APIs that cover every finance-related aspect their clients can imagine. 

The APIs can be roughly divided into four logical categories:

• Core banking services cover the fundamentals of the business like loans, deposits, and cross-border payments.
• Cards, digital wallets, and transfers APIs provide functionality for issuing physical/virtual cards, mobile wallets, and P2P transfers.
• Acquiring APIs take care of online and POS terminal acquiring, electronic payment systems, mobile/NFC payments, etc.
• Plug & Play APIs are ready-made modules that are compatible with any platform out of the box and include solutions for trading, oAuth, fraud monitoring, white-label banking, user interface, and more.

Even though APIs sometimes exist as standalone solutions, they’re mostly aggregated by BaaS providers and platforms. Let’s see who they are.

Core BaaS providers

As BaaS is gaining momentum, new providers appear on the market along with platforms created by banks. While BaaS providers use a closed architecture, platforms are all about sharing APIs with customers. Here are some of the major players.

Fidor Bank 

Founded in 2009, this German company was one of the BaaS pioneers and built its own cloud-based modular platform with more than 40 standardized APIs. Its story also shows how demanding this market is: after years of losses under the BPCE group, Fidor wound down operations, and the bank was liquidated in 2024. The lesson for anyone choosing a partner: check the provider’s financial footing, not just its API catalog.

The Bancorp

Boasting $6.2 billion in assets and an annual combined processing volume of $232 billion, The Bancorp started as a branchless bank and is now a leader in digital financial services. The company provides private-label banking and technology solutions to non-bank businesses. It has held the number one position in prepaid card volume in the US for eight consecutive years and specializes in institutional banking and commercial lending.

Solaris

This licensed digital bank from Germany, which rebranded from Solarisbank to Solaris SE in 2022, provides a BaaS platform that encompasses an array of modular banking APIs. Among other offers on its website, the company advertises a comprehensive solution for creating a fully-fledged neobank. It serves dozens of corporate clients worldwide and has raised several hundred million euros in funding.

Treezor

As their website states, Treezor is a Paris-based banking platform as a service, a “one-stop-shop payment solution.” Acquired by the Societe Generale group in 2019 for its innovative expertise, the company is accredited to provide its clients with personalized payment services. Acquiring, digital wallets, virtual and physical card products—nothing’s off the menu.

We’ve listed only a few of the most successful BaaS providers and platforms on the market.  But the task of picking the right one is always challenging. So here are some recommendations on how to make the right choice.

How to choose a BaaS provider

So you’ve decided that the time is right for your business to integrate with a financial services platform. When looking for your ideal BaaS provider candidate, we suggest you take the following into account:

• Reputation. With a censorless internet, nothing stays secret for long. Look for reviews and testimonials to form an objective opinion.
• Relevance of services. Carefully review the services offered by a particular provider to ensure your business needs are covered.
• Ownership of services. Are the APIs and solutions on offer authored by the company or owned by third parties? This question will become important as the partnership matures.
• Scalability. Does the prospective partner have the tech stack, resources, and stamina to play the long game? Can they stay on top of things as their client base expands and your business needs increase?
• Compatibility and speed to market. How quickly and reliably can a provider deliver the solution you need?

There’s another minor distinction we need to mention in order to prevent confusion.

Banking as a Service vs open banking vs platform banking

These terms sound very similar, and you will come across them, so we thought a short explanation was in order. Here are the differences in a nutshell:

Banking as a Service describes a model where customers interact with the service provider’s solution integrated into a merchant’s product. Like when completing an eBay purchase by paying with your PayPal account.

Open banking is a scenario where a non-bank receives the customer’s data from a financial institution via an Open Banking API, but no banking services are provided. Like when using a personal budgeting app.

Meanwhile, Banking as a platform is a digital ecosystem that allows third-party solutions to work directly with the bank’s infrastructure without a BaaS provider. This way, banks can give their customers a wider choice of options, such as conversational AI in banking or outside fintech services.

Now that we have that out of the way, let’s take a minute and think about what tomorrow brings.

The future of BaaS and how to be a part of it

The landscape of digital financial services is changing rapidly, and Banking as a Service is paving the way for a new reality. Banks, fintechs, service providers, and brands can achieve synergy by building functional and efficient integrated solutions. In an interconnected environment, everyone will reap their respective benefits, provided they promptly adjust strategies.

As financial services become more fine-tuned to reflect the needs of consumers, BaaS providers will attract new customers. Better client profiling and added revenue streams will provide a well-deserved bonus for merchants. All merchants need to do is establish relationships with several relevant providers and manage them efficiently. The benefits for the banking sector from teaming up with providers and brands and reaching a much broader audience are even more obvious.

And then there’s the question of software. APIs and applications are key factors in facilitating these changes and need to be developed in a responsible way to provide long-term efficiency and scalability. Relevant has been doing this for more than a decade, and our dedicated software development teams excel at it. Consider the option of outsourcing in Ukraine to get quality banking IT services.  

We’re ready to invest our time and expertise into your BaaS solution. Contact us today, and we’ll discuss your project!