Banking-as-a-service allows banks and third parties - typically fintechs, or financial technology companies, to build, launch, and grow products and services using application programming interfaces (APIs). Demand for BaaS is strong. In 2022, the global BaaS market was $3,240.6 million and is expected to be $3,713.7 in 2023 (source).
The service allows banks to improve efficiency, reduce costs, and enhance compliance. Specifically, in terms of payments, BaaS allows companies to send and receive payments, including intrabank, ACH, check, and wire. The growing desire for enhanced customer experiences and new products will continue to drive demand for BaaS.
FinTechs tap into banking-as-a-service to offer innovative services. However, the key is in compliance, fraud and Reg E, which is where the Innovative Payments Association comes in to help. Listen to the podcast.