Banking as a Service (BaaS) is the business model in which licensed financial and payment institutions connect their systems with non-banking businesses. Such integration allows third-party enterprises to offer banking and financial services in a digital manner but without licensing or compliance obligations. The fixed and marginal cost reduction would be, through the correct incentives, be forwarded to financial consumers1. Market reports indicate that, by 2030, this business model could reach over EUR 100 billion in revenue2. BaaS commoditization of DFS increases the customer base and reduces costs of offering products, possibly generating financial inclusion and increased competition in the DFS market.
1. Feyen, E. et al. (2022), Fintech and the Digital Transformation of Financial Services: Implications for Market Structure and Public Policy, World Bank Group, Washington, DC, http://documents.worldbank.org/curated/en/099735304212236910 (accessed on 30 August 2025).
2. WhiteSight (2023), The State of Banking-as-a-Service in the UK & Europe, https://19926521.fs1.hubspotusercontent-na1.net/hubfs/19926521/Content/Content/WS-Toqio-BaaS-Report.pdf (accessed on 19 August 2025).
