Banking-as-a-service: a $38B industry in five years?

The banking-as-a-service (BaaS) market is set to more than triple in size over the next five years, according to new research.

Revenues from BaaS providers will reach an estimated $11 billion this year, according to Juniper Research, and will then rise to more than $38 billion by 2027.

Juniper said the growth would largely be due to the ability of BaaS providers to “deepen relationships between brands and their customers by providing a user-friendly banking and payments experience”.

Juniper’s report assessed current providers and ranked Green Dot as the most advanced company in the BaaS space, citing its “strong partnerships” with large retailers. Green Dot provides BaaS offerings to companies including Apple and Walmart.

Dominique Tetnowski, author of the Juniper report, said: “As digital banking is becoming increasingly advanced, pressure is on fintechs to innovate their BaaS capabilities to exceed user expectations.

“Offering a solutions portfolio in BaaS that has all the capabilities needed to offer banking services means that enterprises can focus on delivering a superior user experience, which is critical in an increasingly competitive banking environment.”

Community banking platform provider Bankers Helping Bankers launched the BaaS Association in April this year in partnership with Ohio-based Sutton Bank, with the objectives of engaging with regulators and policymakers, and establishing industry best practice. Sutton’s chief payments officer Robert Keil was announced as the association’s first chair at the end of August.

Fintech firm MOCA Financial became the latest company to join the BaaS Association in September. President and chief revenue officer Shawn Sinner said the association was “a fantastic opportunity to collaborate with community banks to offer a digital account with payment processing and innovative features that will weaponize them against the competition”.