Top Banking-as-a-Service Products in 2023
The banking value chain is being reconfigured by a relatively new business model called “Banking as a Service (BaaS).” It has become a frequently used term in the world of finance.
What does BaaS mean to you as a consumer, business manager, or entrepreneur? Who are the top providers of BaaS? Read on to find the answers to the most asked questions about banking as a service. You will also get insight into what this business model will look like in 2023.
What is Banking-as-a-Service?
Banking as a service (BaaS) refers to an end-to-end business model that enables a third-party organisation to use application programming interfaces (APIs) to establish a direct connection with the systems of banks. By doing so, without having to own the necessary banking infrastructure, the organisation is able to offer financial products and services as if it were a conventional bank. Such third-party organisations include fintech companies, digital banks, neobanks, and other non-financial firms.
What is the importance of BaaS?
With BaaS, the looming threat of fintech startups can be avoided as tech-savvy legacy banks share their banking data and infrastructure. Access to this level of information will be commonplace in a few years thanks to the advancement of open banking following the digital transformation of the industry. Consequently, banks that start this process early will be ahead of current trends and probably enjoy strong demand.
How Banking-as-a-Service Works
A fintech company, digital bank, or other non-banking third parties must apply to a legacy bank or licensed financial institution, sign a contract, and pay an agreed fee in order to use the service provider’s BaaS platform via an API. That is how the BaaS business begins.
By granting such access to its APIs, the bank, financial institution, or electronic money institution (EMI) enables the third-party provider to offer white-label banking services and create new banking products. Examples of products and services that non-traditional banking institutions can offer to their customers through various BaaS business models are physical and virtual debit and credit cards, prepaid cards, checking and savings accounts, and money transfers. Therefore, through BaaS, businesses can boost customer loyalty and increase sales.
Launching their own BaaS platforms allows legacy institutions to advance in open banking while creating new income sources. Their business clients can pay a monthly or annual fee to use the full offerings of their BaaS platforms, or they can pay separately for each service they use. These are the two basic ways to monetize BaaS.
Best Providers of Banking as a Service
Are you looking for the best banking-as-a-service providers to use in 2023? Search no further than our top providers, which include Stripe, Intergiro, and ConnectPay. They are ideal for small and large companies that want to offer banking products and services to their customers.
Here, we have carefully put together the best BaaS providers after a comparison of several options on the market. We picked these ones because they are fully regulated, licensed, professional, and reliable. They also operate at high international standards in terms of security and safety. So, you have nothing to worry about. We present them in no particular order below.
1. Intergiro
Overview: Intergiro is a Swedish EMI and fintech company that provides a wide range of solutions to the challenges of businesses through its BaaS, business banking, and payment processing offerings through partnerships with multiple financial institutions. It has an all-in-one financial toolkit for digital businesses, retailers, e-commerce sites, neobanks, crypto exchanges, payment service providers (PSPs), product builders, innovators, and card acquirers.
You can use Intergiro’s BaaS APIs (Intergiro.3d) to build your financial products. The company is licenced and registered by the Swedish Financial Supervisory Authority. Intergiro’s products are safe to use.
BaaS Products and Services:
- Card as a Service (white-label card issuing).
- Branded virtual and physical cards from Visa and Mastercard.
- Support for digital wallets and mobile wallets like Apple Pay and Google Pay.
- Onboarding as a Service (instant onboarding of your clients within your app, easily meeting all the regulatory and compliance requirements).
- Accounts as a Service (for issuing branded multi-currency IBAN accounts to your customers).
- Data as a Service (offers an analytics platform for real-time collection, cleaning, mapping, and analysis of data on your products).
2. Stripe
Overview: Stripe is a US-based fintech company that provides a powerful infrastructure for businesses of all sizes to accept payments, process transactions, and offer BaaS models. It has one of the best APIs for non-banking organisations to create their payment products and grow their customer bases thanks to its partnerships with multiple banks.
BaaS Product and Services:
- Stripe Treasury (its BaaS API for businesses to embed financial services).
- Issue branded virtual and physical payment cards.
- Enable fast money transfers.
- Offer FDIC insurance-eligible bank accounts.
- Onboard new users through fast KYC checks and ID verification.
3. Satchel
Overview: Satchel is a Lithuanian electronic money institution that offers technologically superior tools for freelancers, entrepreneurs, small businesses, and e-commerce establishments to provide smart financial services to their customers. Through its partnership with other EMIs and banks, it enables third-party companies to offer banking products to their customers without having to obtain a licence.
BaaS Product and Services:
- Satchel BaaS.
- Provide private and business bank accounts with multi-currency IBANs.
- Issue customised payment cards.
4. Mercuryo
Overview: Mercuryo is an Estonia-based fintech company that provides a global payments ecosystem that uses a customer-first approach to enable businesses to make, process, and manage payments in fiat money and cryptocurrencies. Its range of products includes a digital wallet, banking-as-a-service, on-and-off ramps, crypto pay-in and pay-out, and fiat pay-in and pay-out. Mercuryo partners with a number of global banks for its BaaS services.
BaaS Product and Services:
- Mercuryo BaaS (APIs ideal for neobanks, e-wallets, crypto and NFT marketplaces, and dApp platforms).
- Enable ACH and wire transfers.
- Fast access to payments by issuing credit and debit cards from Visa and Mastercard.
5. ConnectPay
Overview: ConnectPay is a licensed EMI and payment service provider based in Lithuania. It has partnerships with Wise, N26, Revolut, and other financial institutions to support the growth of businesses through its range of innovative banking products.
BaaS Product and Services:
- ConnectPay BaaS (APIs suited for payment providers, banks, aggregators, remittance companies, marketplaces, and messaging platforms).
- Issue IBANs.
- Collect fees.
- Execute payments and screen all transactions.
6. MANGOPAY
Overview: MANGOPAY is a Luxembourg-based provider of all-inclusive payment processing solutions for businesses in different industries. Its solutions are ideal for marketplaces, crowdfunding platforms, online retailers, and P2P exchanges. The company enables businesses to create their own branded apps that support a wide range of local and international payment methods. It is regulated by the Financial Conduct Authority in the UK.
BaaS Product and Services:
- MANGOPAY Products.
- White-label technology for customised payments and checkout pages.
- E-wallets with international payment support.
7. Marqeta
Overview: Marqeta is a US-based fintech company that helps businesses with solutions for modern card issuing and payments. It empowers them to be innovative in how they provide banking products and services using its open API and BaaS tools.
BaaS Product and Services:
- Marqeta for Banking.
- Card issuing (branded physical and virtual cards).
- Programme management.
- Spend and risk control tools (digital wallets and PCI widgets).
What Are the Trends to Expect in Banking as a Service in 2023?
According to many experts, including Jelle van Schaick (Marketing Manager, Intergiro), the following are the key trends that everyone should pay attention to in the BaaS market and the banking industry in the coming months:
1. Bank-fintech partnerships
Rather than being competitors, banks and fintech companies will collaborate more than ever through partnerships in 2023. Of course, this is necessary to create BaaS arrangements and other embedded financial services. They will work together to become more efficient, focusing on risk reduction, cybersecurity, improved compliance, and customer satisfaction.
2. Embedded lending, BNPL, and mortgages
In 2023, it is expected that more non-financial establishments will use BaaS to offer business financing, personal loans, “buy now, pay later” plans, lines of credit, and mortgages to their customers. Such arrangements are already gaining popularity in Europe, Asia, and the United States.
3. Community-based banking
In the coming months, there will be more community-based banking, which is also known as “niche banking.” Through BaaS, neobanks and other financial institutions will try to render their services to growing segments of underserved people that form specific customer bases.
4. Tribe-based banking
Banking services are expected to advance from mere transactions to “tribe-based” engagements with customers who share a “common cause” in 2023. There will be more vertical and horizontal communication between businesses and their customers through blogs, websites, and social media platforms like Facebook, WeChat, Twitter, Instagram, WhatsApp, Google+, and LinkedIn.
5. Banking in the metaverse
Between 2023 and 2027, it is expected that the global metaverse market will grow by US$107 billion at a CAGR of 21.33%. Therefore, experts predict that banks and fintech companies will focus more on reaping the benefits of banking in the metaverse. They should look forward to using the metaverse to: attract more Generation Z as a future client base; try to boost future engagements through gamification or Web 3.0; and provide customers with more convenience through face-to-face virtual interactions.
6. Banking with big data
Financial institutions will focus more on using big data for predictive analytics in 2023. Through it, they will try to get a better and smarter understanding of the behaviour of their customers. What would they do with that? Of course, we expect them to use the data to create more innovative products and services. Besides, some banking-as-a-service providers also offer data-as-a-service (DaaS); an example is Intergiro.
7. Increased attention from regulators
The risks posed by any third-party relationships that a bank may enter into in a BaaS arrangement will likely be the focus of regulatory guidelines in 2023. Data ownership and use rights will be at the top of the agenda. Regulators will be focusing on creating rules that can prevent or minimise harm from BaaS and any other trend for concerned stakeholders.
FAQ
The difference between BaaS and embedded finance can be likened to the relationship between an egg and a chicken—the latter produces the former. In other words, BaaS is a product of embedded finance, which is a much broader concept when we look at how non-banks are empowered to function like banks.
Furthermore, BaaS focuses on the back-end development of banking platforms (access to technology and infrastructure), while embedded finance looks at both the front-end (integrating customer access to solutions) and the back-end developments.
Banking as a service is needed to enable non-banking establishments to provide accounts, payment cards, money transfer services, digital wallets, and other financial products to their customers using the infrastructure of licensed banks.
BaaS offers several benefits, which include: end-to-end provision of financial services using custom APIs; revenue generation for the parties involved; fast transactions; and cost-effective service delivery.
Embrace the Future of Banking!
BaaS agreements are becoming more and more common, underscoring how quickly banks, fintech companies, and other businesses are transforming how they provide financial services. By collaborating with non-financial establishments and fintech startups, banks that provide BaaS can reach a larger audience. Consequently, they can earn more profit.
While banking as a service looks so good, it may also put businesses at risk since it exposes the financial services industry to new threats, especially security vulnerabilities. Therefore, interested parties should exercise caution while considering how to join this profitable and quickly growing industry.
We remind you that in this post, we have covered the top BaaS providers on the market to assist with beginning your triumphant entry into this market. Contact them today to start offering banking products and services to your customers.
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