Banking As A Service Market Worth USD 65.95 Billion at a 15.1% CAGR by 2030 - Report by Market Research Future (MRFR)

Rise in Demand for Financial Services Growth in the Presence of FinTech Companies Growing Use of Internet Banking

New York, New York, UNITED STATES

New York, US, March 30, 2023 (GLOBE NEWSWIRE) -- According to a comprehensive research report by Market Research Future (MRFR), " Banking as a Service Market By Type, Organization Size, and By Region – Forecast till 2030” the market is predicted grow substantially during the forecast period of 2022 to 2030 at a CAGR of approximately 15.1% to attain a valuation of around USD 65.95 Billion by the end of 2030.

The banking as a service market is likely to witness significant revenue growth. Rising fintech innovations will allow the BaaS industry to garner considerable traction in the future.

The BaaS market was valued at USD 18.21 billion in 2021, headed by many important innovations in banking security products and services. Besides, the rising demand for scalable and customer service/support fostered market growth. The future of modern servicing banks lies entirely in the cloud. Building a licensed BaaS offering and customer migration is a new trend allowing fantastic achievement.

Banking as a service (BaaS) has transformed the financial services space. Monetizing BaaS is a flexible and agile approach and is often essential in promoting market adoption. Banking as a service platform is often purpose-built for the cloud, moving beyond limited data collection, retention, and compliance.

Many banking organizations today are trying to explore the potential of service automation technologies. Also, growing corporate payment demands encourage financial institutions to turn to banking-as-a-service to offer multiple payment options and enhance customer loyalty.

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Banking as a Service Market Report Scope:

Report MetricsDetails
BaaS Market Size by 2030USD 65.95 Billion (2030)
BaaS Market CAGR Growth 2022-203015.1% CAGR
  Base Year2021
  Forecast 2022-2030
 Report CoverageRevenue Forecast, Competitive Landscape, Growth Factors, and Trends
 Key Market DriversRise in Demand for Financial Services Growth in the Presence of FinTech Companies Growing Use of Internet Banking

Competitive Analysis

The banking as a service market would witness strategic approaches, such as collaborations, expansions, mergers & acquisitions, and advanced technologies integration. Major industry players strategically invest in driving research and development activities and fostering their expansion plans. Major Banks have launched their Banking-as-a-Service (BaaS) offerings using a SaaS cloud banking platform, leveraging state-of-the-art digital solutions for business models that require a banking license.

For instance, on Mar. 16, 2023, Temenos (Switzerland) announced the launch of Qik Banco Digital Dominicano on Temenos Banking Cloud. It is now the first digital-only bank in the Dominican Republic and a part of Grupo Popular. Qik has more than five decades of banking experience and the operational agility & cutting-edge digital experiences enabled by the Temenos platform.

Grupo Popular is a leading financial group in Latin America and operates in the Dominican Republic and Panama. The launch of Qik on the Temenos Banking Cloud will enable the bank to establish a presence in the Dominican Republic quickly. The instant access to packaged banking services via software-as-a-service (SaaS) on Temenos Banking Cloud will allow Qik to meet the digital customers' needs with the highest technological and, security & service standards.

Key players involved in the market are Twilio Inc. (US), Braintree (US), BOKU (US, Coinbase Global Inc., Dwolla (US), Zettle (Sweden), Fidor Bank (Germany), GoCardless (UK), Gemalto (Netherlands), Intuit (US), Square Inc. (US), PayPal, Prosper Inc., Solaris Bank (Germany), Moven (US), among others.

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The market is segmented into types, applications, organization size, and regions. The type segment is sub-segmented into API-based bank-as-a-service and cloud-based bank-as-a-service. Of these, the cloud-based BaaS segment accounts for the largest market share. The segment is likely to witness rapid revenue growth over the review period. The API-based BaaS segment is expected to rise significantly in future years. 

The application segment is sub-segmented into government, banks, and NBFC. Among these, the bank segment holds the largest share of the banking as a service market revenue. The organization size segment is sub-segmented into small & medium-sized enterprises (SMEs) and large enterprises. The large enterprise segment accounts for a significant share of the banking as a service market value, witnessing the growing adoption of BaaS. The region segment is sub-segmented into North America, Europe, Asia-Pacific, Middle East & Africa, and Rest-of-the-World.

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Industry Trends

The rise of new technologies, like API, Blockchain, and Cloud, helps the market garner significant gains. The growing volume & sophistication of cyber threats, increasing complexity of business environments, and skill-shortage gap bolster the growth of the market. Advancing organizations, products, and communications benefit the BaaS market, allowing safe & secure banking. 

Banking organizations are overwhelmed by cyber threats' complexities. Furthermore, the growing pressure of handling too many alerts and the need for more resources & expert personnel at hand promote the demand for BaaS solutions. The growing requirement of banks and corporates to connect to ERP-to-ERP through APIs to exchange and make the most optimized products substantiates the market shares. 

Many brands are looking to embed financial capabilities in their customer's journeys. The growing focus on bringing together the right solutions, partnerships, and talent to frame embedded finance ambition creates vast market demand. When banking organizations land a good opportunity, they change their commercialization or monetization strategy to achieve traction in the marketplace.

The COVID-19 outbreak impacted the banking as a service market positively. With increasing IT & telecom and digital transformations, the banking as a service market geared up phenomenally. Small and medium-sized businesses (SMBs) observed their online transaction volumes increase during the pandemic. The Coronavirus pandemic also fostered digitization and automation across the banking sectors globally. 

Besides, the great digital shift that emerged during the pandemic pushed banking as a service (BaaS) market revenues. Many banks digitized their business processes, including product management, sales & marketing, and others. The BaaS market has witnessed a constant uptick over the past few months. Resultantly, solution providers are investing substantially to foster R&D activities to develop and improve banking services. 

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Regional Analysis

North America dominates the global banking as a service market. The region witnesses vast R&D investments to advance financial solutions and automation technologies in the banking sector. Besides, the large presence of banking as a service provider and state-of-the-art development centers in the region propels the market's growth. With the faster adoption of fintech technologies needing banking as a service platform, the US, Canada, and Mexico account for sizable shares in the regional market. 

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