Banking as a Service Explained: A Simple Guide for Business Leaders [2025]
At its core, Banking as a Service is a model where banks provide direct API access to third parties. This allows these companies to build new financial products using regulated banking infrastructure without becoming banks themselves. Digital banks and fintech companies can focus on creating excellent user experiences while the BaaS platform handles complex regulatory requirements behind the scenes.
For business leaders, BaaS creates substantial opportunities. SaaS companies adding financial products to their offerings can boost revenue 2-5x. Platforms embedding banking services see significant increases in customer lifetime value and reduced churn rates. The market potential remains largely untapped – only 48% of small businesses currently have access to all the financing they need.
Traditional banks with technical expertise are also benefiting from this trend. By becoming BaaS providers, these institutions create new revenue streams while effectively responding to competition from agile fintech startups. Opening their infrastructure creates both financial transparency and innovative business models.
This guide walks through what Banking as a Service means for your business strategy, how these platforms work, and practical steps to implement BaaS solutions across different industries.
Why Business Leaders Should Care About BaaS
Business leaders across industries are paying attention to Banking as a Service (BaaS) for good reason. This model lets non-banking businesses offer financial services through direct bank connections via APIs, fundamentally changing how financial products reach end users.
The shift toward embedded finance
Embedded finance—where financial services integrate directly into non-financial platforms—has become a major business trend with BaaS as its foundation. The numbers tell a compelling story: embedded finance is projected to reach USD 7.00 trillion by 2030, creating massive opportunities for companies willing to act now.
The growth is already substantial. BaaS platform markets are expanding at a CAGR of 15.7% and should hit USD 12.20 billion by 2031. What's more striking is that over 85% of senior executives have either implemented or plan to deploy BaaS solutions within just 12 to 18 months.
Why such rapid adoption? Today's customers simply expect financial services to be part of their regular activities. About 83% of institutions say their customers now want embedded finance experiences, with this demand growing as digital interactions become standard.
Financial services are breaking free from traditional banking channels. Instead, they now appear naturally within everyday consumer activities across e-commerce, travel, retail, healthcare, and telecommunications platforms.
Opportunities for non-financial companies
For businesses outside the financial sector, BaaS opens doors to new possibilities. The benefits for companies implementing these solutions are clear:
- Revenue enhancement: Over one-third of businesses using BaaS expect revenue growth exceeding 15% annually
- Customer loyalty: Stronger relationships with existing customers through added financial services
- Competitive differentiation: Custom financial products designed for specific customer needs
- Cost efficiency: Ability to launch financial products without banking licenses or compliance infrastructure
Non-banking companies can offer financial products under their own brand, making customers feel they're buying directly from them, even though a financial institution handles the actual service behind the scenes. This creates advantages for both sides—distributors boost revenue with good margins while strengthening customer relationships.
Real-world examples show this potential clearly. Uber has worked with banks to create debit cards that let drivers receive payments faster and earn fuel purchase rewards. Airlines have partnered with BNPL services to offer flight payment installment plans.
At its core, BaaS lets companies add banking features to their platforms without becoming banks, removing major barriers that previously kept many businesses out of financial services.
How BaaS supports digital transformation
BaaS has become essential to broader digital transformation efforts. Companies using these platforms can innovate quickly without massive infrastructure investments or regulatory headaches.
Traditional banking operations are typically expensive and complex. BaaS platforms offer a fresh technology stack that cuts customer acquisition costs dramatically. One digital bank in China reported annual costs of just USD 0.60 per client, while traditional banks often spend over USD 20.00.
BaaS enhances digital transformation through:
- Accelerated innovation: Companies can bring new financial products to market up to 10 times faster than traditional methods
- Compliance management: Many providers offer compliance as a service, helping clients avoid complex banking regulations
- Technological agility: Cloud-based AI/ML and automation technologies enable smarter credit decisions, fraud reduction, and streamlined processes
Netguru has worked with several key players in this space. Their collaboration with Solarisbank, Europe's leading Banking-as-a-Service platform, included expanding API services and implementing solutions for payments, e-money, lending, bank accounts, and KYC services.
Another example involves Dock Financial, where Netguru developed a KYC tool and compliance infrastructure that enables on-demand approvals and verification processes meeting regulatory requirements.
The flexibility of Banking-as-a-Service allows companies to adjust strategies quickly based on market demands, making it a vital component of modern digital business planning.
Core Components of a BaaS Platform
The architecture behind Banking as a Service platforms consists of several interconnected technological layers that work together to enable non-banking companies to offer financial services. Understanding these key components helps business leaders make better decisions when choosing a BaaS provider.
Banking infrastructure and APIs
The foundation of any BaaS platform is its core banking infrastructure. This infrastructure must be modular by design to support customization and agility. With this architecture, companies can create and manage various banking and payment services, including current accounts, money transfers, and cards.
APIs (Application Programming Interfaces) serve as the engine powering BaaS. These interfaces facilitate communication between different software systems, allowing third parties to connect with banking services. A well-documented set of APIs enables seamless integrations with other systems, partners, and developers.
Modern BaaS platforms typically include these essential components:
- User management: Functions for registration, authentication, authorization, and profile management
- Data storage: Cloud-based solutions for secure information storage
- Push notifications: Real-time alerts for users even when applications aren't actively running
- Cloud code: Capabilities to execute custom code on the provider's servers
Some service providers offer cloud-native cores specifically designed for BaaS. For instance, Q2 provides the Helix core, while companies like Mbanq and Solid market specialized BaaS core capabilities.
Security, compliance, and KYC layers
Security and regulatory compliance form critical layers of any BaaS platform. The multi-party nature of BaaS relationships—involving banks, fintechs, and end users—creates complex compliance challenges that require robust systems.
BaaS platforms must implement stringent security measures, including multi-factor authentication, password encryption, and data protection protocols. Additionally, providers need to maintain PCI DSS-compliant environments to ensure transaction security.
Know Your Customer (KYC) processes represent a fundamental compliance requirement. These procedures allow financial institutions to confirm the identity of organizations and individuals they serve, protecting against illegal activities such as money laundering and terrorist financing. Effective KYC implementation includes:
- Customer identification programs
- Customer due diligence
- Enhanced due diligence for high-risk clients
- Ongoing monitoring throughout the customer lifecycle
BaaS providers typically handle significant compliance responsibilities on behalf of their clients. This reduces the internal resources needed to maintain regulatory adherence, including managing user verification, ensuring PCI compliance, implementing KYC requirements, and maintaining fraud prevention measures.
Integration with third-party services
The ability to integrate with various external services distinguishes powerful BaaS platforms from basic offerings. These integrations extend functionality through connections with payment processors, identity verification services, and specialized fintech solutions.
Most BaaS platforms provide support for social integrations, enabling features like social logins through services such as Facebook, Google, or Twitter. Platforms often include analytics capabilities that track app usage, user behavior, and other key metrics to support data-driven decision-making.
Netguru has established itself as a key player in developing these integration capabilities. Our work with Solarisbank, Europe's leading Banking-as-a-Service platform, included expanding API services, implementing solutions for handling debit cards, and developing middleware connecting client applications with Solaris' API. Netguru also supported Solarisbank in scaling credit card management for major clients.
Similarly, Netguru partnered with Dock Financial to develop crucial compliance infrastructure, including a KYC tool that enabled on-demand manual approvals and customer verification processes. Their work included building an API that allows customers to conduct one-time verification and reuse KYC profiles, ultimately helping meet regulatory requirements while streamlining the user experience.
The most effective BaaS platforms make integration as straightforward as possible, providing developer-friendly APIs and ready-to-use financial infrastructure that allows businesses to quickly build and deploy financial services.
Business Models Enabled by BaaS
Banking as a Service creates new business opportunities well beyond traditional finance. As more companies adopt BaaS across different industries, several profitable business models have emerged, benefiting both banks and non-banking entities alike.
White-label banking for platforms
What makes white-label banking so appealing to platforms? It lets companies offer financial products under their own brand, creating a seamless experience where customers interact only with the platform they already trust. This behind-the-scenes approach means non-banks can provide banking services without obtaining a banking license or building complex compliance infrastructure.
In practice, licensed banks grant non-bank partners access to their regulated systems through APIs for a fee. The non-banking company then delivers these banking services through their own user interface.
We've already seen successful implementations like:
- Uber Pro Card, giving drivers instant access to their trip earnings
- Shopify Balance, embedding small business bank accounts directly in the e-commerce platform
- Square Checking, offering customized debit cards for store purchases or ATM withdrawals
The results speak for themselves. Businesses using these solutions report that customers who adopt white-label banking products show 2.5x higher engagement with other platform features and stay with the platform at rates up to 6x higher than non-users.
Netguru has become an important facilitator in this space, supporting major BaaS providers like Solarisbank, Europe's leading Banking-as-a-Service platform. Their work included expanding API services, creating solutions for handling debit cards, and building middleware connecting client applications with Solaris' API. They also helped Dock Financial develop essential compliance infrastructure, including KYC tools that enable on-demand verification processes crucial for white-label banking.
Revenue sharing and fee-based models
BaaS platforms use various monetization approaches that benefit all participants. These typically include:
- Monthly access fees: Regular charges for platform access
- Per-service charges: Billing for each specific service used
- Revenue sharing agreements: Splitting income from end-user transactions
- Setup fees: One-time charges for initial integration
- Interchange revenue: Taking a portion of card transaction fees
For partners using these services, BaaS can drive significant revenue growth. Studies show SaaS companies can increase their revenue 2-5x by adding financial services. This opportunity has fueled what industry experts now call "SaaS 3.0" – a new generation of software platforms with financial products at their core.
SaaS 3.0: Monetizing financial services
SaaS 3.0 marks a fundamental shift in how software companies make money. While SaaS 2.0 platforms added payment processing to supplement subscription revenue, SaaS 3.0 goes further by embedding comprehensive financial services—loans, accounts, cards, and more—directly into their core offerings.
This evolution happened naturally. Many platforms already handled online payments as a basic requirement for market competition. Now, with BaaS solutions readily available, these same platforms can move beyond simple payment processing to offer sophisticated financial products.
For vertical SaaS companies serving specific industries, these embedded financial offerings create "stickier" products while reducing operational costs. A construction company platform might start with bidding, invoicing, and budgeting tools, then expand to offer white-labeled debit cards and individual wallets functioning essentially as an ad hoc bank.
The cost benefits are substantial. By bringing financial services in-house, companies eliminate the expense of onboarding and maintaining relationships with outside vendors. Remy Carole at Treasury Prime notes that BaaS integration typically takes just two weeks of engineering time compared to the traditional 6-18 months required for direct bank integration.
The market has validated this trend—embedded finance features are becoming essential in today's competitive landscape, with the BaaS model now extending across technology companies, e-commerce platforms, and various industries providing banking services through financial institution partnerships.
Real-World BaaS Success Stories
Looking at actual BaaS implementations reveals how these platforms deliver value across different industries. These case studies highlight practical applications and real business benefits of Banking as a Service technology.
Solarisbank and Netguru: Building scalable BaaS
Solarisbank has established itself as Europe's leading BaaS platform, offering a complete package of digital banking solutions through its API-driven infrastructure. Their growth story is impressive – in less than three years, they built their platform, scaled their team, and raised nearly €100 million from investors including Arvato, BBVA, Visa, and ABN AMRO's Digital Impact Fund.
Netguru played a key role in Solarisbank's development journey by providing specialized technical expertise. Their collaboration focused on expanding Solarisbank's API capabilities, allowing third parties to access secure digital banking solutions. Netguru's contributions included:
- Creating a standalone team for debit card platform development using Ruby
- Strengthening consumer loan products through Elixir programming
- Implementing test automation for continuous delivery
- Developing a Mastercard API for credit card ordering and control
Even during the 2020 pandemic, Solarisbank secured Series C funding and launched major products with Visa, Samsung, and American Express – showing how well-designed BaaS platforms can thrive even in challenging conditions.
Dock Financial: KYC and compliance innovation
Dock has become a pioneer in payment and compliance infrastructure, with over 20 years dedicated to making financial services more accessible. Their platform powers end-to-end white-label solutions, focusing primarily on simplifying compliance and regulatory requirements.
Netguru partnered with Dock to create innovative KYC tools that balance security with good user experience. Together, they built a compliance infrastructure supporting:
- On-demand manual approval workflows
- Customer verification processes meeting regulatory standards
- API functionality for one-time verification with KYC profile reuse
- Scalable architecture that supports additional compliance modules
This partnership shows how specialized BaaS providers can tackle specific challenges in the financial ecosystem, particularly around regulatory compliance – often considered the most complex aspect of delivering financial services.
Stripe and Shopify: Embedded finance at scale
Stripe has emerged as a leading embedded finance infrastructure provider, powering solutions for major platforms like Shopify. Their work together demonstrates how deeply banking services can integrate into existing business workflows.
Shopify Balance represents a particularly successful BaaS implementation. Built on Stripe's Issuing and Treasury services, it gives merchants a comprehensive financial management solution within their existing e-commerce environment. As Tui Allen, Senior Product Lead for Banking at Shopify, noted, building across Stripe's payments and banking-as-a-service infrastructure helped them provide merchants with financial products that met their specific needs.
The solution allows Shopify merchants to:
- Manage funds directly in their Shopify dashboard
- Pay bills and track expenses in real-time
- Access faster payment processing and improved cash flow management
- Earn rewards tailored to business spending patterns
These real-world examples show how BaaS platforms create value through specialized expertise, compliance management, and seamless integration with existing business systems – ultimately driving both innovation and business growth.
How to Choose the Right BaaS Provider
Choosing a Banking as a Service platform isn't a decision to take lightly. Too many companies rush this process and end up with partnerships that don't align with their business goals or technical needs.
Key features to look for
When evaluating BaaS providers, start by checking whether their platform includes integrated payments services. Platforms that combine both payments and banking functions significantly cut down complexity and internal costs. You'll also want to find providers that support multiple financial services—accounts, cards, and lending—through a single system as your business grows.
The technical architecture of a solid BaaS platform should include:
- Open APIs that reduce custom development costs
- Digital workflows for routing funds based on business rules
- AI capabilities for detecting and preventing fraud
- Real-time payment processing options
Netguru's work with Solarisbank shows why strong technical foundations matter. By helping Solarisbank expand their API services and build middleware connecting client applications with their API, Netguru made it possible for third parties to access secure banking solutions across multiple services.
Evaluating integration and support
Beyond features, what about the actual integration process? The best BaaS platforms offer developer-friendly APIs and ready-to-use infrastructure that makes implementation straightforward—often reducing integration time from the traditional 6-18 months down to just two weeks of engineering work.
You should also assess the provider's:
- Track record with businesses similar to yours
- Performance stability during scaling
- Quality of documentation and developer resources
- Responsiveness of their support teams
Understanding compliance responsibilities
Finally, make sure you clearly define who handles compliance. BaaS operates in a highly regulated environment, requiring adherence to KYC requirements, AML regulations, and various data protection standards.
Netguru's collaboration with Dock Financial demonstrates the value of compliance expertise. Their partnership created a compliance infrastructure supporting on-demand verification workflows that satisfy regulatory requirements while maintaining a smooth user experience.
The most reliable providers handle significant compliance burdens for you, reducing the internal resources you'd need to maintain regulatory adherence. This lets your business focus on what you do best while still offering sophisticated financial services to your customers.
Steps to Launch Your Own BaaS Offering
Implementing Banking as a Service requires careful planning and a clear strategic approach. Companies need to align their BaaS offering with both their risk tolerance and technical capabilities to ensure success.
Define your financial service goals
The first step is setting clear objectives. Before approaching potential BaaS partners, you must determine exactly which financial products you'll offer and map out how money will flow between accounts. Getting internal buy-in across your organization is essential – from board members to individual contributors, everyone needs to understand their role in the BaaS program.
The financial opportunity is compelling: research from Oliver Weyman shows that traditional banks typically spend $100-$200 to acquire each customer, while a BaaS technology stack can reduce this to just $5-$35. To maximize this efficiency, you should:
- Create realistic revenue projections
- Define your target customer segments
- Select specific banking services to prioritize initially
Select a provider and integration model
BaaS implementations generally follow one of two models: on-behalf-of accounts (where the bank manages individual customer accounts) or sub-ledger models (where the bank provides services on a private label basis). Your choice significantly affects both your brand visibility and operational requirements.
When evaluating providers, assess their technological infrastructure, API capabilities, and compliance expertise. Netguru's work with Solarisbank highlights the importance of strong API foundations and middleware that effectively connects client applications with the provider's systems – critical components for any scalable BaaS implementation.
Similarly, Netguru's collaboration with Dock Financial demonstrates the value of robust compliance infrastructure, particularly KYC tools that enable on-demand verification while meeting regulatory standards.
Ensure regulatory readiness and testing
Regulatory alignment must be established early in the process. Smart organizations engage with regulators before launch to prevent surprises and demonstrate their understanding of BaaS requirements. Your risk management plan should include:
- Due diligence processes for new partners
- Ongoing monitoring protocols for third-party relationships
- Annual audit engagement procedures
- Fraud prevention and security measures
Many companies benefit from a phased implementation approach. Starting with core banking products and adding more complex offerings after establishing deeper bank relationships allows you to gather performance data, validate financial models, and refine your offerings based on real-world feedback.
Conclusion
Banking as a Service represents one of the most significant shifts in financial services since we first saw online banking emerge. Throughout this guide, we've seen how BaaS platforms create valuable opportunities across nearly every industry to improve customer experiences, build new revenue streams, and gain competitive edges.
The market data tells a compelling story—open banking propositions are growing at 25% annually, with embedded finance expected to reach $7 trillion by 2030. Companies that ignore these opportunities risk falling behind competitors who move more quickly. The results speak for themselves: businesses implementing BaaS solutions report customers using embedded financial products show 2.5x higher engagement and stay with them 6x longer than other customers.
Business leaders should view BaaS as more than just a technical integration—it's a strategic business decision with far-reaching effects. Choosing the right BaaS provider becomes essential, requiring thorough evaluation of technical capabilities, compliance expertise, and integration support. The partnerships between Netguru and companies like Solarisbank and Dock Financial demonstrate how specialized technical knowledge enhances BaaS offerings through expanded API capabilities, strong compliance infrastructure, and scalable systems.
While implementing BaaS certainly comes with challenges, the potential benefits make it worth serious consideration. Better customer experiences, stronger brand loyalty, and new revenue streams are powerful incentives for forward-thinking companies. The BaaS ecosystem continues to mature, with providers now offering sophisticated solutions that address specific industry needs while managing complex compliance requirements.
Business leaders from all sectors would benefit from consulting with technology experts to develop a BaaS strategy tailored to their organization's goals and customer needs.
Banking as a Service has moved beyond being just another fintech buzzword to become an essential business strategy. The question isn't whether financial services will become embedded into non-financial platforms, but how quickly companies will adapt to this new reality and make the most of its potential.
