Bump Up the BaaS: Banking-as-a-Service Roundup 2022

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The banking universe has been all about the BaaS – with platforms of all genres needling their way to providing tailored offerings. Integrating financial services directly into regulated financial infrastructures has become the new norm thanks to the adoption of embedded finance, as it caters to the appeal of ease of use by businesses and consumers.

From payments to lending and even bank accounts and cards, Banking-as-a-Service (BaaS) is neatly unfolding novel revenue models for industry players, where diverse value chain configurations between licensed financial institutions, BaaS Tech enablers, and front-end FinTechs and non-banks underplay to create contextualised customer experiences. A wide variety of financial services are delivered to consumers via APIs and modern digital tech stacks, making it easier than ever for any ecosystem participant to offer banking and financial propositions to customers and, in the process, deliver superior financial inclusion and wellness experiences to customers and unlock new revenue streams for themselves.

Having previously implored on the many themes of embedded finance – such as BNPL’s Transition Phase, Neobanks’ Tryst with BNPL, Super App Strategies, and even deep diving into the Banking-as-a-Service wave in the US – in this post, we are extending our magnifying glass to do a quick roundup of the industry events that have transpired in the BaaS sector.

Under The BaaS Umbrella: “as-a-service” Models

Non-licenced businesses today are connecting to banks’ systems to offer a wide range of digital banking features aggregated into their own products via an assortment of banking-as-a-service archetypes.

Hubuc, a Barcelona-based startup, serves to be a noteworthy example of a services hub that promises to enable any company to add managed financial services – from bank accounts to payments, virtual and physical cards, as well as real-time FX rates and digital wallets – to their product offering. Another Latin American player is Pomelo, which provides FinTech infrastructure to companies offering financial services, thereby allowing its clients to create virtual accounts and distribute debit and credit cards. Adding to the list, there’s also Treasury Prime, a leading BaaS company that lets enterprise clients easily embed services like bank accounts, payments, and cards into their products and service offerings. Its recent partnership with Third Coast Bank SSB proves to be an instance through which banks and FinTechs can come together to stay relevant in the competitive landscape while also enhancing day-to-day solutions’ deliverance.

Several other contributors come with cards up their sleeves – with Europe’s Enfuce specialising in card issuing and payment processing services that help banks, FinTechs, and financial operators; Episode Six providing modern cloud-based card and payment processing that includes consumer credit and debit-card services; and Synctera’s move of bringing a card program to BankProv’s FinTech partners that offer cryptocurrency-related services including exchange, deposits, and payment services.

Many such initiatives have since then surfaced for different models:

    • Philippines-based NetBank joined forces with Kayamo to implement Lending-as-a-Service via a ‘Virtual Account’ solution that allows loan repayments and real-time loan disbursements.

    • Solarisbank partnered with Berlin’s fina to bring an Investment-as-a-service solution that aims to offer partners easy access to securities brokerage services over a single API; whereas DriveWealth and Sproutfi are expanding affordable access to investing in the US markets to everyone in Latin America via the latter’s investment platform.

    • FinTech Rewire promoted its Insurance-as-a-Service program in collaboration with leading InsurTech Qover by creating a holistic migration package that accommodates the unique cross-border financial needs of migrants. On the other hand, Zip integrated Cover Genius’ XCover global insurance distribution platform into its BNPL platform for secured customer purchase journeys.

    • The Payments-as-a-Service model was highlighted through Finastra and HSBC coming together to integrate HSBC FX services with mid-tier banks, allowing participating banks to provide automated FX pricing capabilities and deliver a wide range of currencies to customers. The initial rollout is set to focus on financial institutions in the Asia-Pacific region, with other areas to follow soon after.

Integrating with Regions on the Map: Global Outlook

The BaaS phenomenon has been making the rounds across several markets as of late, with countries openly embracing BaaS strategies and equally working on corresponding regulatory actions to adapt to modern-day digital shifts.

In North America, delivering a full suite of banking and payment abilities is what most companies are striving to achieve. LTK’s partnership with Stripe is one example where the two firms have joined together to power instant, simplified, and secure creator payments via the LTK Connect self-serve platform to empower brands of all sizes to scale their programs. Another move is that of the Derivates Path teaming up with Goldman Sachs Transaction Banking to use the cloud-based Payments-as-a-Service solution for helping financial institutions with spot foreign exchange and payments complexities. FIS and Treasury Prime, on the other hand, launched an embedded finance tool focused on small- to medium-sized financial institutions to gain new ways to manage deposits, accounts payable (AP) and other essential banking functions remotely and digitally.

Moving over to the EMEA region, varied sectors seemed to have joined heads in catalysing the foundation of as-a-service platforms. While crypto giant Ripple and Modulr built a Payments-as-a-Service plan into the European and UK payment rails to improve the payments process, Abu Dhabi-based NymCard is growing its plug-and-play-ready offering in core markets of Abu Dhabi, Dubai, Riyadh, Cairo, and Karachi.

APAC and Latin America aren’t far behind – Indian embedded finance firm M2P seems to not only be riding the BNPL wave, but also witnessing the widespread adoption of its programmable credit card stack in other FinTech markets across Europe, Africa and Asia. Another key player is Bexs Pay, which employs a cross-border model that allows Brazilians easier access to international products and services.

Distributing Value via Diverse Events: Significant BaaS Activities

Additionally, many events and headlines have brought to light the significant moves in the BaaS landscape over the months. The industry seems to have been bustling with attention-grasping affairs ranging from partnerships to launches and even funding rounds to acquisitions.

    • Affiliations were on the rise in the BaaS ecosystem, with Gap Inc. launching a new credit card program with Barclays and Mastercard, enabling clients to earn points by shopping while also receiving exceptional rewards on groceries, dining, travel, and more.

    • Visa and Solarisbank also partnered with FINOM to launch an innovative business account in Italy that combines banking, e-invoicing, and finance management services on a single platform. Meanwhile, BaaS integrator AAZZUR extended its partnership with Railsr to increase its compliance-ready core banking products while becoming the front-end BaaS provider for Railsbank’s DACH clients.

    • At the same time, many industry participants chose to roll out offerings that added the extra zest to their already bubbling lineups. Finastra’s unveiling of its embedded consumer lending solution that aims to give access to traditional regulated lending options for consumers at point-of-sale (POS), and Q2 expanding its BaaS offerings through embedded finance product Helix account for two noteworthy developments in the segment.

    • To add to the brimming list of activities through the lens of funding and acquisitions, Weavr secured $40M in a Series A round to expand its Plug-and-Play Finance offering to the States and across Europe, while Fitbank acquired Brazilian credit marketplace EasyCrédito to strengthen its BaaS business, adding loans in addition to payment operations.

At the Heart of it All

The path to transformation is already underway due to the BaaS revolution, where the gap between technology and finance is being bridged to bring integrated experiences to newer customer segments. With regulated Open Banking and ready-to-use financial frameworks becoming a fast reality, the opportunity to reshape economies and unlock more value from existing resources and customer relationships has become a goal for BaaS value chain participants.

At the same time, BaaS seems to be getting into regulatory crosshairs, with multiple ,regulatory agencies turning their attention to the entry of non-banks into the financial industry. The BaaS phenomenon has grown leaps and bounds over the last couple of years, but the true nature of the beast, i.e., operating successfully in a highly regulated financial services industry, will get revealed once they pass through the regulatory scrutiny that has come knocking on its doors. In addition, we have also witnessed massive fallouts among some of the BaaS providers and BaaS customers, such as ,Green Dot and Uber, and ,Goldman Sachs and Apple for its BNPL launch. With the significant growth witnessed by the FinTechs and non-banks offering financial services powered by the BaaS stack, regulators would like to ensure consumer protection and have clear accountability of systemic risk management responsibilities in the BaaS value chain.

The BaaS phenomenon has evidently been the bedrock of unleashing digital innovation and competition in the industry so far and now stands at a point where regulators have begun to look underneath the veil. We expect more clarity and guidance from the regulators in the next few months would do a world of good for the sector. Until then, more power to BaaS-powered trends where the unbundling and re-bundling of financial services keep rolling the BaaS!


Senior Branding Associate

Kshitija is a senior branding associate at WhiteSight, crafting branding strategies and fintech content. When she's not conjuring up new ideas for the company, you can find her dabbling in new hobbies and documenting her experiences through writing and short films.

Senior Research Associate

Risav is a senior research associate at WhiteSight, where he spends his days navigating the complex fintech landscape and poring over market trends. When he's not decoding the world of fintech, you'll find this sports fanatic decoding the perfect curveball on the football field.

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