Banking as a service is the provision of banking services and products through third-party enablers with API-driven platforms. By integrating regulated financial infrastructure with the non-banking businesses, BaaS offerings foster new and specialized propositions. Let’s take an example to shed light on how Baas works.

Imagine you are the manager of an airline; your business is facing stark competition. You started giving loyalty points to attract and retain steadfast customers whenever they used your company card, say, a debit card. Every time your customer uses the card, they interact with your brand. But the question arises, how an airline company can offer a debit card for transactions? Due to the Baas, non-banks can also provide banking services by integrating with licensed banks through API-driven platforms given by Fintechs to break the banks’ monopoly.

It means that a non-bank business, such as your airline, can offer its customers digital banking services such as payment services, mobile bank accounts, and debit cards without acquiring a banking license. The bank’s system communicates via APIs, letting customers access banking services directly through the airline’s website or app. Today, all companies—including retailers, telcos, big techs and software companies, and car manufacturers—are preparing and contemplating launching embedded financial services to serve business and consumer segments.