Confused about Banking as a Service (BaaS)? Read our guide, which explains how it works and what problems it solves, and which companies are key players.

What is Banking as a Service (BaaS)?

Banking as a Service (BaaS) is essentially a (regulatory, tech, user interface, etc.) 'solution' that provides banking processes.

BaaS can let many different types of businesses provide financial products to their customers, whether the business is a financial service provider, FCA-regulated business or Fintech company that wants to offer payment and banking services to their customers, or another type of business that wants to embed financial products into the sale of their main products and services for their customers.

Many types of businesses can use BaaS to embed financial products like insurance or payment services like buy now pay later (BNPL).

According to industry estimates, BNPL has grown from a niche startup offering into a widely used payment method, with UK Finance reporting over 11 million UK shoppers using BNPL products as of 2024 (source: UK Finance, 2024 Payment Markets Report). This sector is undergoing significant regulatory change: as of July 2026, the FCA has confirmed that BNPL products will be brought under formal oversight, introducing mandatory affordability checks and Section 75 consumer protection for regulated agreements. Readers should check the FCA's published timeline at fca.org.uk for the current implementation position, as details are subject to ongoing consultation.

How does BaaS work?

Let's say a fintech wants to provide money transfer services and bank accounts to its customers; or a large furniture company wants to offer loans to their customers. How do they do it? These businesses don't have the banking licence needed; they don't have expertise in the product or the technical and regulatory complexities of banking. This is where BaaS providers comes in - they serve as the financial services partners to provide not only the financial product and expertise, but also to meet regulatory requirements.

BaaS providers have expertise and provide the required elements (banking licence, compliance, risk management, a user interface, provision of the actual product, etc.) in a modular fashion. For example, one BaaS provider might provide the banking licence, another the user interface and know your customer (KYC) compliance. Some BaaS providers can supply multiple elements; they each have their own strengths and capabilities.

Businesses that use BaaS typically pay a fee to access the BaaS platform, which is done via APIs - an application programming interface (API) is essentially a software interface that forms a connection to share access to a service or other software. BaaS providers use APIs to give their customers access to the systems needed to provide these financial products.

Why BaaS is needed from a regulatory perspective

In order to sell financial products like insurance, bank accounts, credit and debit cards, and more, a banking licence is required.

It's difficult to become a bank - there's a massive amount of time, money and regulation required to get a banking licence. But nearly any business (e.g. e-commerce site, retailer, transport company, travel company, fintech, etc.) can pretty easily act like a bank (that is, offer embedded finance banking services to its customers) by partnering with a real bank that will essentially share its banking licence - and offer the products and tools required.

What do BaaS providers actually provide?

As mentioned above, there is a wide array of services and tools that BaaS providers can supply. These are often referred to as a 'stack' - and you can build your stack to cover all of these elements by going to one or more BaaS providers. Some BaaS organisations provide the banking licence if they have it, while others focus on other elements of the stack.

• Banking licence

• Compliance and regulatory reporting for KYC, AML, PSD2, and GDPR

• Risk management

• Operations

• User interface

• Products

How long does it take to set up BaaS

BaaS providers supply modular elements that can be brought online in just a few hours, in some cases.

Why is BaaS taking off?

BaaS is becoming very popular, which is down to some major consumer shifts, regulatory trends and technological advancement.

Consumer shifts

In recent years, customers have become more receptive to using financial products offered by non-financial businesses. For example, buying insurance to cover expensive concert tickets or taking advantage of a buy-now-pay-later offer when buying a big-ticket household item.

Not only that, but the shift to online shopping has been amplified during the pandemic, with customers not only shopping more online but becoming comfortable sharing their personal preferences and details with businesses they trust. Brands with high customer trust and loyalty can deepen their customer relationships by offering financial products that help their customers, complementing sales of the main business. Primarily, this means embedding financial products that help customers pay for or protect (i.e. with insurance) whatever it is they are buying.

Regulatory trends

Regulatory trends have shifted from simple data sharing to rigorous fraud prevention — which has spurred BaaS development. A landmark change occurred in October 2024, when the Payment Systems Regulator (PSR) introduced mandatory scam reimbursement rules requiring both sending and receiving banks (including BaaS providers and the fintechs using them) to share liability for reimbursing victims of Authorised Push Payment (APP) fraud up to £85,000 per claim (source: PSR, October 2024). Readers should check the PSR's current guidance at psr.org.uk for the latest position, as rules and limits may be updated.

And the advent of open banking lets banks, third-parties and technical providers simply and securely exchange data to the benefit of their customers.

BaaS providers

BaaS players are a mix of companies that use their own banking licences (some of which have their own retail customers as well, some don't) and companies that use the banking licence of another institution. Here are factual overviews of some of the providers active in the market. Details are correct to the best of our knowledge as of July 2026; always verify directly with each organisation, as the BaaS market moves quickly.

EMBank — a Lithuanian digital BaaS provider that offers API-based access to European banking infrastructure. It is positioned as an option for fintechs seeking cross-border scale within the EU regulatory framework.

Solaris — a Germany-based BaaS platform that raised €140 million in funding in 2025 and has developed automated compliance tooling including an instant onboarding product called Bankident Plus.

Bankable — a global BaaS platform focused on modular payments and helping non-financial brands launch banking products while managing regulatory requirements.

Treezor — a BaaS platform owned by Société Générale, serving a broad range of European clients with payment and banking infrastructure.

11:FS Foundry — a consultancy-led platform that focuses on helping established banks modernise their core infrastructure using cloud-native architecture.

Cambr — a US-based BaaS middleware provider. Its market position has shifted in 2026 following regulatory changes in the US affecting bank-fintech partnership structures.

ClearBank — a UK-based clearing bank that provides BaaS infrastructure to fintechs and financial services businesses. ClearBank has published that it processes a significant share of UK SME transactions, though readers should verify current figures directly with ClearBank.

Starling Bank — through its Engine subsidiary, Starling licenses its core banking software to other financial institutions, including banks outside the UK.

Fidor Solutions — Fidor's technology was acquired by Sopra Banking Software in 2021 and is now operated as part of that group's digital banking suite.

BBVA — the Spanish banking group has developed an AI-driven data and API platform operating across Europe and Latin America.

Disclaimer: This article is for general information only. Details of companies, regulatory positions and market figures are correct to the best of our knowledge as of July 2026, but the BaaS market and regulatory landscape change rapidly. Please verify all details independently before relying on them for business or financial decisions.