Banking-as-a-Service (BaaS)
A licensed bank offering accounts, cards and payments to other companies through APIs.
Banking-as-a-Service (BaaS) is a model in which a licensed bank offers its regulated products — accounts, cards, payments and sometimes lending — to non-bank companies through APIs, so they can put banking features into their own products under their own brand. The bank holds the licence and the deposits; the company builds the experience, often through a BaaS platform that sits in between.
BaaS and open banking are related but different. Open banking shares data from a customer’s existing account with apps they choose; BaaS lets a company offer the account itself. A fintech built on BaaS still needs somewhere for its customers’ transactions to be categorised and understood, which is where a connector to a money-insights app such as 2Fin comes in.
Worked example
A payroll app opens a spending account for each worker through a BaaS platform, with the deposits held by its partner bank. The worker’s transactions sit in the app’s ledger, and the app can push them to 2Fin through the OAuth 2.0 push API, with the worker’s approval, so they arrive categorised beside the worker’s other accounts.
Common mistake
Treating the BaaS platform as the bank. The licence, the deposit protection and the regulatory duties sit with the partner bank, so customer terms, complaints handling and data obligations have to say clearly which party does what.
Figures last checked . General information, not tax advice.
Related terms
Open banking connector
Software that moves bank transaction data between systems on published standards.
Transaction categorisation API
An API that sorts raw bank transactions into categories.
ISO 20022
The international standard for financial messages — payments, statements and more.
camt.053 (ISO 20022 bank statement)
The end-of-day bank statement in ISO 20022 XML.
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Questions about this term
Banking-as-a-Service (BaaS): common questions
- What is the difference between BaaS and open banking?
- Open banking lets a customer share data from an account they already hold with an app they choose. BaaS lets a company offer the account itself, built on a licensed bank’s products. One moves data about existing accounts; the other creates new accounts under another brand.
- Who is responsible for customer funds in a BaaS arrangement?
- The licensed partner bank holds the deposits and the regulatory obligations that come with them. The company offering the product and any BaaS platform in between are responsible for what their own agreements say, which is why regulators look closely at how the three share records and duties.
- How does a BaaS platform connect to 2Fin?
- Through published standards. Its customers can import camt.053, MT940, OFX or CSV statements, or the platform can push each transaction through 2Fin’s OAuth 2.0 API once the customer approves it, and a platform that wants its banks featured in 2Fin’s bank picker can submit its connector.
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