Banking as a Service (BaaS), an innovative fintech model of powering fintechs and corporates with ”integrated financial services” (white label provision of a full stack of financial services products and supporting infrastructure and back office capabilities), has rapidly evolved as a disruptive theme in Europe. As we observed previously, SaaS (Software as a Service) and ISVs (Independent Software Vendors) saw massive upsides in integrating financial services starting with payments, a theme that investors loved. Integrated payment services matured due to Adyen, Stripe, and other PSPs offering the tech and enabling infrastructure for SaaS to embed payment services across use cases. Heavy interest from investors also supported high valuations for PSPs such as Stripe and Checkout, amongst others. Now, with the rapid proliferation of BaaS fintechs (see figure 1), we are seeing the expansion of integrated financial services beyond payments to fuel the broader needs of fintechs, corporates, and SaaS.
FIGURE 1: European Landscape of BaaS Providers (2022; select players, based on office locations and license approvals)