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This market report extensively covers market segmentation by End-user (banks, NBFC, and government), Component (platform and services), and Geography (North America, Europe, APAC, South America, and Middle East and Africa). It also includes an in-depth analysis of drivers, trends, and challenges.
The BaaS market share growth by the banks' segment will be significant during the forecast period. Increasing adoption of advanced financial technology in banks is one of the major drivers for the growth of the segment.
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The banks' segment was valued at USD 7.31 billion in 2017. Banking as a service allows banks to use APIs that help them to share data with third-party financial institutions. As open banking becomes the norm, banking as a service provides new streams of revenue for banks. This service provides benefits, including cost-saving initiatives and increased customer insights. Such advantages of banking as a service are expected to increase its adoption in banks, which will drive the growth of the banks' segment in the market during the forecast period.
Banking-as-a-platform (BaaP) enables financial institutions to utilize the resources and expertise of a platform provider, reducing the burden of managing digital infrastructure. By adopting a platform business model, institutions can offer scalable and adaptable services, keeping up with internet-based banking. BaaP also allows for data tracking across products and services, providing valuable insights to institutions to focus their resources on the most in-demand services. The benefits of BaaP include reduced development time and cost, access to existing APIs, customized solutions, and enhanced revenue-sharing options, driving growth in the global platform segment.
North America is estimated to contribute 38% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
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North America is expected to see growth in the market during the forecast period, thanks to the region's advanced technology adoption. Top investment banks, like Goldman Sachs, are investing in technology to improve their customer service through new apps and interfaces. Additionally, the growing number of FinTech startups in Silicon Valley will lead to an increase in lending and payment upgrades, as well as improved credit underwriting procedures using big data and analytics. These factors are expected to drive the demand for banking as service solutions in the FinTech industry, contributing to the growth of the market in North America.
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The market is experiencing rapid growth driven by the increasing digitalization of financial services. BaaS platforms leverage Application Programming Interfaces (APIs) to enable seamless integration of financial services into various non-financial digital channels such as e-commerce, travel, shopping, and fitness. This trend has led to a rise in demand for BaaS among fintech businesses and traditional banks looking to enhance their digital offerings. BaaS platforms offer a range of services including account opening, money lending, and cost management dashboards, catering to the evolving needs of account users. However, the high costs of adoption remain a challenge for many banking institutions seeking to enter this market. Our researchers analyzed the data with 2022 as the base year and the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
Increasing adoption by end-users is a key driver in the market. Financial institutions can also access banking capabilities like lending, accounting, and corporate finance, providing better services to businesses. This is expected to drive demand for banking as a service during the forecast period. Non-banking financial companies (NBFCs) are also adopting banking as a service solution to offer core banking services, leading to a hassle-free customer experience. This is supported by financial services, digitalization, account opening, money lending, cost management dashboards, high costs of adoption, and banking institutions. With NBFCs offering bank accounts, digital wallets, lending, and payments, the use of banking as a service is increasing among various end-users, driving growth in the market.
Growing partnerships, collaborations, and agreements are a major trend in the BaaS market.
Thus, increasing partnerships, collaborations, and agreements is one of the growing trends that is expected to drive the growth of the global BaaS market during the forecast period.
Implementation and data security challenges are major factors hindering the market. Fintech companies new to banking as a service may be unaware of available product offerings, and they face implementation barriers such as legal and security concerns, lack of understanding of available products, and the need to onboard additional service providers. Data security and privacy are major concerns in the market due to the digitization of customer financial data. Many financial enterprises are concerned about their data being misused, making them skeptical about deploying this service for their operations. These challenges may hinder the growth of the global BaaS market during the forecast period.
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Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the BaaS market. One of the major companies in the market include:
Movencorp Inc. - The company offers banking as a service solutions and services.
The banking as a service (BaaS) market report also includes detailed analyses of the competitive landscape of the market and information about 15 market players, including:
Qualitative and quantitative analysis of vendors has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize vendors as pure play, category-focused, industry-focused, and diversified. Furthermore, it is also quantitatively analyzed to categorize vendors as dominant, leading, strong, tentative, and weak.
The BaaS market research report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027.
The market is witnessing rapid growth driven by the increasing adoption of online banking and the emergence of BaaS platforms. Legacy banks are partnering with third parties and government agencies to leverage Artificial Intelligence (AI) and enhance financial transparency. There is a rise in demand for digital transactions and financial services, leading to the development of innovative banking software and audit services. Smaller banks are adopting BaaS solutions to stay competitive in the evolving financial services landscape. The market is characterized by the integration of cloud services and Infrastructure as a Service (IaaS), enabling Embedded finance and facilitating API-based Bank-as-a-service offerings for organizations of all sizes.
The market is experiencing significant growth due to the increasing adoption of BaaS platforms and the demand for financial transparency. This trend is driven by the need for access to a wide range of financial services and goods through various channels, including telecommunications. The market is also witnessing a rise in demand for audit software and services and innovative bank-as-a-service solutions that leverage new technologies such as IT software and hardware. Cloud services, particularly Infrastructure as a Service (IaaS), are playing a crucial role in enabling BaaS offerings, including non-financial services and third-party services. Financial technology companies are increasingly leveraging their infrastructure to provide BaaS systems, particularly in the API-based Bank-as-a-service segment. The market caters to organizations of all sizes, including Large Enterprises and Small & Medium Enterprises, with a focus on enhancing organization size and driving banking as a service revenue.
Market Scope |
|
Report Coverage |
Details |
Page number |
146 |
Base year |
2022 |
Historic period |
2017-2021 |
Forecast period |
2023-2027 |
Growth momentum & CAGR |
Accelerate at a CAGR of 14.62% |
Market growth 2023-2027 |
USD 21.80 billion |
Market structure |
Fragmented |
YoY growth 2022-2023(%) |
13.72 |
Regional analysis |
North America, Europe, APAC, South America, and Middle East and Africa |
Performing market contribution |
North America at 38% |
Key countries |
US, Canada, China, France, and Germany |
Competitive landscape |
Leading Vendors, Market Positioning of Vendors, Competitive Strategies, and Industry Risks |
Key companies profiled |
11:FS, Alkami Technology Inc., Banco Bilbao Vizcaya Argentaria SA, Block Inc., Bnkbl Ltd., ClearBank Ltd., CREALOGIX AG, Currency Cloud Group Ltd., Finastra, Fiserv Inc., Green Dot Corp., MatchMove Pay Pte Ltd., Movencorp Inc., PayPal Holdings Inc., Q2 Holdings Inc., Societe Generale SA, Solarisbank AG, StoneCastle Digital Solutions LLC, Temenos Headquarters SA, and Urban FT Group Inc. |
Market dynamics |
Parent market analysis, Market Forecasting, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID 19 impact and recovery analysis and future consumer dynamics, Market condition analysis for forecast period |
Customization purview |
If our market report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by End-user
7 Market Segmentation by Component
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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