The Global Banking-as-a-Service Market size is expected to reach $51.2 billion by 2028, rising at a market growth of 15.6% CAGR during the forecast period.
In order to integrate digital banking & payment services into their own products, Fintech companies and other non-banking financial organizations are given clear access to customer data, core systems, licensing, and functionality by incumbent financial organizations and service providers who use BaaS. These organizations do not hold the necessary banking regulations.
The primary goal of using BaaS is to allow non-banking services to offer bank-based services without being constrained by regulations. The organization will typically need to open its own financial institutions in order to provide these services because it will need to obtain the necessary banking licenses and comply with capital and money laundering regulations.
Due to the impending digitization of banking, companies from a variety of other industries, including retail and consumer goods, are looking into newer strategies to increase their customer base and give them a more individualized experience. Growing internet usage has already made it simpler for people to adopt online banking, laying the groundwork for the use of other cutting-edge technologies that can boost businesses' profits.
The major strategies followed by the market participants are Partnerships. Based on the Analysis presented in the Cardinal matrix; PayPal Holdings, Inc. is the major forerunner in the Banking-as-a-service Market. Companies such as The Currency Cloud Ltd., Sopra Steria Group SA, Block, Inc., are some of the key innovators in Banking-as-a-service Market.
The market research report covers the analysis of key stake holders of the market. Key companies profiled in the report include Green Dot Corporation, PayPal Holdings, Inc., Block, Inc., Sopra Steria Group SA, Moven Enterprises, Solarisbank AG, The Currency Cloud Limited, Treezor SAS, Bnkbl Ltd., and MatchMove Pay Pte. Ltd.
In order to integrate digital banking & payment services into their own products, Fintech companies and other non-banking financial organizations are given clear access to customer data, core systems, licensing, and functionality by incumbent financial organizations and service providers who use BaaS. These organizations do not hold the necessary banking regulations.
The primary goal of using BaaS is to allow non-banking services to offer bank-based services without being constrained by regulations. The organization will typically need to open its own financial institutions in order to provide these services because it will need to obtain the necessary banking licenses and comply with capital and money laundering regulations.
Due to the impending digitization of banking, companies from a variety of other industries, including retail and consumer goods, are looking into newer strategies to increase their customer base and give them a more individualized experience. Growing internet usage has already made it simpler for people to adopt online banking, laying the groundwork for the use of other cutting-edge technologies that can boost businesses' profits.
COVID-19 Impact Analysis
Before the pandemic, digital banking was an essential part of retail banking, but during the outbreak, consumers have been moving significantly more of their banking online. Financial services like bank accounts or digital wallets, lending, & payments are increasingly offered by nonbank organizations. Accepting embedded finance offered by nonbanks aims to keep customers, creating a positive outlook for the sector, which is good news for its expansion. Additionally, banks and the FinTech sector are becoming more interested in banking as a service platform to improve their internal operations and offer secure contactless payments to expedite their payment transaction process.Market Growth Factors
Use Of Digital Transformation Technology Is Increasing Among Banks
Data or information is transformed into a digital format through the process of digitization using cutting-edge technology. Due to the banks' growing need to provide improved consumer services and increase customer security, it plays a very important and crucial role in the banking sector. Additionally, banking as a service also enables banks to provide digital payment services to their clients and speeds up the debt collection process, both of which contribute to the market's expansion.Increasing Efficiency Of The Financial Services
The simplicity of integration should be the main objective when developing an API strategy. It ought to be able to maximize business value while minimizing the onerous integration requirements. The globalization of API strategy may be part of the financial sector's future. Through APIs, the banking-as-a-service platform gives third-party organizations access to financial services. Likewise, banking-as-a-service helps banks and fintech firms streamline their financial services, improve their offerings, and improve customer experiences, all of which contribute to the market's expansion.Market Restraining Factors
No Relationship With A Personal Banker
By the help of banking-as-a-service, one might be able to take care of the everyday banking requirements on their own for the most part. However, it might be more challenging to resolve issues if users don't have a personal connection with a banker when problems arise. While consumer service departments are available on online banking sites, one frequently has to navigate a phone tree as well as wait on hold prior to speaking with someone who is unfamiliar with someone's needs or banking history.Component Outlook
On the basis of component, the banking as a service market is segmented into platform, and services. In 2021, the platform segment dominated the banking-as-a-service market by generating maximum revenue share. Banking-as-a-Service can embed the financial services that banks have traditionally offered due to service platforms. The offerings comprise opening a bank account, distributing cards, and even making loans.
Product Type Outlook
Based on product type, the banking as a service market is fragmented into API-Based Banking-as-a-Service, and Cloud-Based Banking-as-a-Service. In 2021, the API-based segment covered a substantial revenue share in the banking-as-a-service market. A fintech company as well as a bank can exchange data securely owing to the BaaS API. This gives businesses the ability to provide banking services to users on their app or web interfaces. The growth of the segment is also being fueled by the significant efforts being made by various fintech businesses to enhance the BaaS ecosystem.Organization Size Outlook
By organization size, the banking as a service market is divided into large enterprises, and small & medium enterprises. In 2021, the large enterprise segment led the banking-as-a-service market with the highest revenue share. Many large corporations are making investments in banking capabilities to offer consumers supplemental financial solutions. Finastra, a provider of financial IT software, polled 1,600 additional people and interviewed 50 top corporate executives.End-Use Outlook
Based on end-use, the banking as a service market is classified into banks, NBFC, government and others. The NBFC segment accounted a substantial revenue share in the banking-as-a-service market in 2021. The NBFCs are using BaaS platforms more frequently to provide payment services. The reason the NBFCs are more likely to incorporate BaaS platforms into their products is that obtaining a banking license comes with high capital requirements.Regional Outlook
Region wise, the banking as a service market is analyzed across North America, Europe, Asia Pacific and LAMEA. In 2021, the North America region led the banking-as-service market with the largest revenue share. The establishment of the BaaS market is credited with the growth by regional technology firms like PayPal Holdings, Inc., Green Dot Bank, and others. Also, the region is one among the most advanced in terms of technology and the adoption banking as a service would be rapid and thus, regional market will grow in the upcoming years.Cardinal Matrix-Banking-as-a-Service Market Competition Analysis
The major strategies followed by the market participants are Partnerships. Based on the Analysis presented in the Cardinal matrix; PayPal Holdings, Inc. is the major forerunner in the Banking-as-a-service Market. Companies such as The Currency Cloud Ltd., Sopra Steria Group SA, Block, Inc., are some of the key innovators in Banking-as-a-service Market.
The market research report covers the analysis of key stake holders of the market. Key companies profiled in the report include Green Dot Corporation, PayPal Holdings, Inc., Block, Inc., Sopra Steria Group SA, Moven Enterprises, Solarisbank AG, The Currency Cloud Limited, Treezor SAS, Bnkbl Ltd., and MatchMove Pay Pte. Ltd.
Strategies deployed in Banking-as-a-Service Market
Partnerships, Collaborations and Agreements:
- Mar-2022: Treezor partnered with Aazzur, a Berlin-based financial technology company. This partnership would allow both companies to expand their consumer base and strengthen their BaaS offering. Under this partnership, the companies would build a more integrated payment solution for businesses looking to enter the next generation of banking with Treezor providing the regulation, security & infrastructure, and AAZZUR improving the consumer experience.
- Mar-2022: Green Dot entered into a partnership with Plaid, the data network powering the digital financial ecosystem. This partnership aimed at bringing secure open finance solutions to GO2bank consumers. Under this partnership, the companies would offer GO2bank consumers an API-based, token-based open finance experience to allow the data connectivity that today’s customers expect. Moreover, this partnership would allow Green Dot real change in the industry by delivering an on-ramp for consumers who can benefit from simple, secure access to digital solutions.
- Mar-2022: Currencycloud came into a partnership with Moov, a US-based developer platform. This partnership focused on enhancing a range of international & domestic payment capabilities for each other’s consumers. With this partnership, businesses working with Currencycloud would be able to expand in the domestic US payments ecosystem, ensuring a seamless experience for their consumers who are building a global business.
- Jan-2022: Solarisbank came into a partnership with Contis Group, a company that offers a financial service platform. Through this partnership, the companies aimed at becoming a complete end-to-end one-stop-shop for banks, fintech, and corporates embedding finance.
- Nov-2021: Currencycloud entered into a partnership with Unit, the New York-based banking-as-a-service platform. This partnership focused on offering CurrencyCloud's customers an easy, seamless way to fulfil both domestic & international banking requirements. This partnership would further help Fintech innovators of all sizes to have a seamless embedded banking experience domestically as well as globally.
- Oct-2021: Currencycloud partnered with Plaid, an open finance network and payments platform. This partnership would enable consumers to fund their accounts without ever leaving the platform, simplifying the payment journey by delivering new joint solutions to make it easy for firms in the UK, including Fintech companies and banks, and foreign exchange brokers, to operate in multiple currencies.
- Jun-2021: Currencycloud entered into a partnership with Global Processing Services (GPS), a multi-award-winning payments processor. The partnership aimed at broadening access to cross-border payments for financial institutions & fintech, providing a passport to a post-COVID world. The partnership would allow businesses to offer consumers compliance & regulatory infrastructure, cross-border payments infrastructure, real-time FX for overseas card transactions, access to a global banking network, multi-currency accounts, banking cards & much more.
- Jun-2021: Bankable came into a 10-year strategic partnership with Aion Bank, and Vodeno for all European markets and the UK. Under this partnership, Bankable would set up pan-European, pre-approved account & card programmes under Aion Bank payment and settlement rails with the aim of accelerating time-to-market for premium banks, global brands & fintech.
- Mar-2021: PayPal partnered with Cashfree, a payments & banking technology firm. This partnership would enable Indian small businesses to enter into PayPal's 350-plus million customer base across 200 markets.
- Dec-2020: PayPal came into a partnership with Razorpay, a financial technology unicorn. This partnership would allow seamless international payments for MSMEs & freelancers. This partnership focused on PayPal's aim to enable Indian small businesses and freelancers to expand across the globe and enter into the company's 333 million customer base across 200 markets.
- Nov-2020: Moven partnered with Q2, a financial experience company. This partnership focused on providing a turnkey digital “bank-in-a-box” that can be deployed by a traditional bank in as little as 30 days. This partnership would allow any credit union or bank to utilize their charter & deliver their own digital-only channel to acquire deposits or new consumers in a few weeks.
- Jun-2020: Treezor collaborated with IDEMIA, a multinational technology company. This collaboration focused on developing a broad range of groundbreaking products such as metal cards and new look / new-feel cards.
- Feb-2020: Bankable entered into a partnership with Visa, an American multinational financial services corporation. Through this partnership, Bankable would provide Visa’s US-based clients with access to its banking solutions, which would allow them to use digital banking and faster payment services.
- Jan-2020: Bankable partnered with Plaid, a data network powering the fintech apps. This partnership focused on enabling Bankable’s customers with the ability to use Plaid’s technology to connect with their users’ bank accounts globally. Also, through this partnership, Plaid's consumers would gain access to Bankable’s cloud-based banking and payment platform.
Product Launches and Product Expansions:
- Mar-2022: Currencycloud released Weekend FX. This product would offer customers a competitive fixed FX rate after the markets close on a Friday evening, and this rate would be what clients and their consumers settle at on Monday morning when the market opens again.
- Sep-2021: PayPal introduced a new PayPal app, an all-in-one, a personalized app that provides users with all of the tools they need to manage their financial lives. The new PayPal app has various features that would allow users to earn rewards redeemable for cash back or PayPal shopping credit. Additionally, this app would provide a single place for PayPal clients to manage their bill payments, get paid up to two days earlier with a new Direct Deposit feature & buy, hold and sell cryptocurrency.
- Jan-2021: Green Dot launched GoBank, the first bank account designed from scratch to be opened and utilized on a mobile device. Go Bank provides Features such as debit card customization, a Huge Fee-Free ATM Network, Mobile Checkbook & Bill Pay etc. GoBank is fast, fair, and feature-rich, enabling customers to interact with their money in a way that’s immediate, intuitive, and intimate.
Acquisition & Mergers:
- May-2022: MatchMove completed the acquisition of Shopmatic, an international eCommerce company. From this acquisition, the company focused on creating an end-to-end digitalization offering for businesses. This acquisition would enable MatchMove to provide its BaaS capabilities to Shopmatic’s ecosystem of more than a million e-commerce SME consumers.
- Jan-2022: Block acquired Afterpay, an Australian financial technology company. This acquisition aimed at allowing Block to better deliver compelling financial products as well as services which would expand access to more customers and help drive incremental revenue for sellers of all sizes.
- Sep-2021: PayPal signed an agreement to acquire Paidy, a leading two-sided payments platform. This acquisition focused on expanding PayPal's capabilities, distribution, and relevance in the domestic payments market in Japan, the third largest e-commerce market all over the world, complementing the company's existing cross-border e-commerce business in the country.
- Jan-2021: Sopra Steria took over Fidor Solutions, the software subsidiary and digital banking specialist of Fidor Bank. This acquisition focused on accelerating the pace of development & marketing of Sopra Banking Software’s digital solutions, in particular by augmenting the user features offered to banks through its Digital Banking Engagement Platform (DBEP) solutions.
Geographical Expansions:
- Jul-2021: Solarisbank expanded its geographical footprints in France, Italy, and Spain. The expansion would enable Solarisbank to offer local IBANs in the regions. Also, the expansion would enable Solarisbank’s partners with uninhibited access to the local financial ecosystems of Europe.
- Apr-2021: Currencycloud expanded its geographical footprint in Singapore. This expansion would enable Currencycloud to provide on-the-ground support for present consumers while bringing its embedded solutions to even more banks, Fintechs, and financial institutions.
Scope of the Study
Market Segments Covered in the Report:
By Component
- Platform
- Services
By End User
- Banks
- NBFC
- Government
- Others
By Organization size
- Large Enterprises
- SMEs
By Product Type
- Cloud-Based
- API-Based
By Geography
- North America
- US
- Canada
- Mexico
- Rest of North America
- Europe
- Germany
- UK
- France
- Russia
- Spain
- Italy
- Rest of Europe
- Asia Pacific
- China
- Japan
- India
- South Korea
- Singapore
- Malaysia
- Rest of Asia Pacific
- LAMEA
- Brazil
- Argentina
- UAE
- Saudi Arabia
- South Africa
- Nigeria
- Rest of LAMEA
Key Market Players
List of Companies Profiled in the Report:
- Green Dot Corporation
- PayPal Holdings, Inc.
- Block, Inc.
- Sopra Steria Group SA
- Moven Enterprises
- Solarisbank AG
- The Currency Cloud Limited
- Treezor SAS
- Bnkbl Ltd.
- MatchMove Pay Pte. Ltd.
Unique Offerings from the Publisher
- Exhaustive coverage
- The highest number of Market tables and figures
- Subscription-based model available
- Guaranteed best price
- Assured post sales research support with 10% customization free
Table of Contents
Chapter 1. Market Scope & Methodology
Chapter 2. Market Overview
Chapter 3. Competition Analysis - Global
Chapter 4. Global Banking-as-a-Service Market by Component
Chapter 5. Global Banking-as-a-Service Market by End-use
Chapter 6. Global Banking-as-a-Service Market by Organization size
Chapter 7. Global Banking-as-a-Service Market by Product Type
Chapter 8. Global Banking-as-a-Service Market by Region
Chapter 9. Company Profiles
Companies Mentioned
- Green Dot Corporation
- PayPal Holdings, Inc.
- Block, Inc.
- Sopra Steria Group SA
- Moven Enterprises
- Solarisbank AG
- The Currency Cloud Limited
- Treezor SAS
- Bnkbl Ltd.
- MatchMove Pay Pte. Ltd.
Methodology
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