Why Banking-as-a-Service Is Moving Beyond Startups

For a long time, Banking-as-a-Service (BaaS) was seen as the ultimate accelerator for daring fintech startups: get to the market sooner, avoid the licensing system, and integrate right away into the banking structures that are already in place. However, the story is changing quickly. Starting in 2025, BaaS is gradually being recognized as a strategic engine for large corporations, brands, and even traditional banking institutions that want to change their digital offerings.

So, what has changed? How did BaaS transform from a superpower of startups to an essential business for the whole market? Let’s explain it.

The Beginning: BaaS Shortcut for Startups

The main reason BaaS quickly became popular with startups was simply its speed.

To go the traditional route for getting a financial product to market would mean consulting, having several legal frameworks in place, getting a core banking system, KYC/KYB layers, fraud detection and prevention machines, ledger management, and so on. BaaS took the whole thing and put it into APIs and modular building blocks. It would take a two-person startup weeks instead of years to develop a debit card, lending application, or digital wallet.

This new approach not only efficiently but also effectively helped the fintech boom. However, the story told around it created the misconception that BaaS was only for startups. Meanwhile, a much bigger opportunity was silently growing somewhere else.

Read More: How Embedded Finance Is Quietly Reshaping Consumer Loyalty

BaaS is Now Going Beyond Startups

1. Enterprises Are Seeking Embedded Finance Features

Big brands, from retail to transport, want to facilitate the use of money services inside their ecosystems. For instance, consider the following:

• A travel application offering the customer instant credit
• A retail chain introducing its own e-wallet and loyalty card
• A gig platform giving out instant payments

The requirement of a global and secure financial infrastructure is there for companies that are not in the fintech field. The Bank as a Service (BaaS) providers take care of the existing rails and finances without the need for enterprises to become licensed banks. 

2. Banking Is Transforming

Consumers are getting more and more habituated to the idea of payment, loans, and financial features being part of their daily apps without even being aware of the activities going on behind the scenes. This “invisible banking” transition implies financial functionalities must accompany users wherever they are – not in separate banking applications.

Businesses interpret this as a plus point over competitors:

• Greater retention
• Larger transaction value
• Less friction in the customer acquisition process
• Greater customer lifetime value (CLV)

The startups were the ones to innovate embedded finance, but it is the large companies that will make it a norm.

3. Old School Banks are Leveraging BaaS to Accelerate Modernization

Traditional banks understood that they could not modernize their obsolete systems fast enough to stay in the competition. Instead of starting from scratch, banks are:

• Creating BaaS-based layers for launching the digital-only brands
• Collaborating with the cutting-edge BaaS technology vendors to broaden the product line
• Doing BaaS and selling as a way of making money

4. Heavy Compliance is Difficult for Small Startups to Bear Alone

With the tightening of regulations, the cost of managing risk, Anti-Money Laundering (AML) controls, and fraud checks has increased drastically. The founders of many start-ups decided that the amount needed to be spent in order to run a compliant financial service was out of reach for their bootstrapping budgets.

On the contrary, the big companies have both the resources and the willingness to form a strong compliance partnership. Thus, the BaaS providers are increasingly giving preference to those clients who are capable of scaling sustainably.

5. BaaS Is Now Built for Scale, Not MVPs

The initial BaaS platforms of the first generation were all about going to market quickly. The next generation of technologies is about:

• Expansion into multiple countries
• Infrastructure that can handle high availability
• Top-notch security
• Service Level Agreements (SLA) at the enterprise level
• Analytics that are advanced
• Compliance modules that are based on law or regulation

Read More: Why Cross-Border Fintech Infrastructure Is the Next Competitive Edge

The New BaaS Landscape: A Tool for Startups to Layer Over Global Infrastructure

The change is no longer slight; it is deep-rooted. BaaS has matured into:

• A model for outreach for banks
• A method of increasing power for enterprises
• A stronghold for compliance for platforms
• A source for marketplaces to get money
• A shortcut for tech to expand globally

Still, startups play an important role, being the innovators of the fintech industry. However, along with enterprise ecosystems, BaaS will gain revenue, scale, and durability.

The Future of BaaS?

1. Increased Regulation, More Maturity

After several major BaaS failures, global regulators have been tightening up their audits of BaaS providers. Expect:

• Tighter regulations on the bank-fintech relationship
• Increased operational standards
• More attention to end-to-end compliance

Enterprises will find it easy to operate under this stable environment, but the same cannot be said for some startups.

2. Progress in Multi-Bank Routing

The BaaS providers find themselves connecting more and more to multiple banks as a way of getting resilience, global support, which is vital for big companies operating with different currencies and regions.

3. AI-Powered Compliance and Risk Management Systems

AI will be the heart of the following systems:

• Fraud detection
• AML monitoring
• Customer risk rating
• Regulatory reporting

The application of this automation will attract non-financial enterprises even more to BaaS.

4. A Clear Divide: Consumer vs. Enterprise BaaS

Lightweight BaaS platforms will continue to be a resource for startups, but the top layer will be an enterprise-first one, boasting better security, more integration possibilities, and support for cross-border transactions.

Conclusion

Banking-as-a-Service has changed a lot and is no longer what it was before. What was a temporary solution for fintech startups has developed into an ecosystem that supports loyalty programs, digital payments, instant lending, and embedded financial ecosystems across industries, thus becoming a global infrastructure model. 

BaaS is not “leaving” the startups behind; rather, it is becoming the main channel for money to flow in modern digital experiences. By the next financial innovation wave, we will not have separate apps. Instead, all apps, services, and platforms will provide financial capabilities powered by BaaS.

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