An enterprise guide to BaaS (Banking as a Service)

The financial landscape is evolving at an unprecedented pace. Traditional banking models are being challenged by digital-first approaches, and companies across industries—whether in fintech, insurance, travel, or e-commerce—are seeking ways to embed financial services seamlessly into their platforms. This is where Banking as a Service (BaaS) can play a role.

For business leaders navigating this shift, understanding BaaS is crucial. It’s not just a trend; it’s a ground-breaking innovation enabling businesses to scale, modernise, and meet customer expectations in a rapidly changing market. But what exactly is BaaS, and how can enterprises leverage it effectively?

This article will cover what BaaS is, its key benefits, and how businesses can harness its potential to drive growth and innovation.

BaaS refers to the delivery of banking-like services through third-party distributors. BaaS products enable non-financial companies to offer innovative, specialised solutions and accelerate their market entry through the provision of integrated regulated financial infrastructure, via APIs.

Instead of building banking infrastructure from scratch—a costly and complex endeavour—businesses can plug into existing banking systems to provide services such as payments, card issuing, lending, and compliance management.

Think of it as the financial sector’s equivalent of cloud computing. Just as cloud platforms enable businesses to scale without investing in physical servers, BaaS providers empower companies to offer financial services, while minimising the burdens of licensing, compliance, or infrastructure management.

Why enterprises need to understand BaaS now more than ever

For enterprises looking to stay competitive, BaaS offers a gateway to financial innovation and customer-centric experiences. It enables companies to:

• Embed finance into their ecosystem – Whether it’s a travel company issuing prepaid cards or an e-commerce platform providing buy-now-pay-later options, embedded finance enhances the user experience.
• Accelerate go-to-market strategies – Instead of navigating the lengthy process of obtaining financial licences, enterprises can integrate with a BaaS provider and launch financial products faster.
• Ensure regulatory compliance – Partnering with an established BaaS provider means enterprises can leverage built-in compliance measures, reducing the risks associated with financial regulation.
• Optimise operational efficiency – By outsourcing core financial services to a BaaS provider, businesses can focus on innovation rather than infrastructure.

Examples of how BaaS is reshaping key industries

BaaS isn’t just transforming fintech. Industries such as insurance, travel, and retail are also leveraging financial services integration to enhance their offerings. Leaders in these industries are adopting BaaS to drive winning business strategies. Understanding these potential strategies has never been more important.

How key industries are leveraging BaaS:

Fintech & digital banking

Challenger banks use BaaS to quickly deploy digital banking solutions. They're leveraging BaaS platforms to offer seamless account management, payments, and card issuance without building their own banking infrastructure from scratch.

Fintech startups integrate payment solutions without requiring banking licenses. Payment technology companies are leveraging BaaS solutions to enable businesses to process payments, manage transactions, and even offer financial services like loans, all while staying focused on their core operations without needing to navigate complex regulatory environments.

Travel

Online travel agencies (OTAs) are leveraging Banking-as-a-Service (BaaS) to manage travel supplier payments with ease, reduce costs, and improve cash flow management. 

Solutions like Edenred Payment Solutions provide virtual payment cards (VCNs) that allow OTAs to automate transactions and enhance security with single-use card numbers. For example, when a customer books a hotel and rental car, an OTA can instantly generate separate VCNs for each supplier, ensuring fast and accurate payments while earning rebates on transactions. This BaaS-powered approach reduces fraud risks, simplifies reconciliation, and optimises the OTA’s financial operations, making it a key driver of efficiency and profitability in the travel industry.

Retail

Retailers are increasingly partnering with Banking-as-a-Service (BaaS) providers to enhance customer engagement and streamline operations. Edenred Payment Solutions offers customisable card programs, including physical and digital prepaid products, that integrate seamlessly into retailers' systems & enable bespoke loyalty schemes.

By relying on the robust in-house processing capabilities of BaaS providers, retailers can ensure intuitive purchase and redemption journeys, regardless of transaction volumes, and access data dashboards for strategic decision-making. This BaaS approach allows retailers to focus on core operations while offering enhanced payment experiences to their customers.

Key considerations when choosing a BaaS provider

With a growing number of BaaS providers in the market, selecting the right partner is critical. Business leaders should evaluate:

• Regulatory expertise – Does the provider operate under proper licensing frameworks, adhere to industry standards, and ensure compliance with evolving regulations in all jurisdictions where you do business? A strong focus on compliance minimises risks and builds trust with customers. 
• API reliability and scalability – Can the platform support seamless integration with your existing systems while ensuring reliable performance during peak usage? Does it offer scalability to accommodate future growth, new features, or expanding transaction volumes? 
• Security & fraud prevention – How robust are the provider’s security measures, such as encryption, two-factor authentication, and real-time fraud monitoring? A secure platform safeguards sensitive data and prevents unauthorised access to customer or business information. 
• Customisation & flexibility – Does the provider offer tailored solutions that cater to your specific business needs? Can their platform adapt to unique workflows, branding requirements, and evolving strategies without compromising functionality? 

Why Edenred Payment Solutions?

With deep expertise in payment solutions, card issuing services, and embedded finance, Edenred Payment Solutions deliver truly bespoke BaaS solutions tailored to your specific business needs. We'll work closely with you to understand the biggest value-add opportunities, design and implement custom financial solutions seamlessly, while ensuring compliance and operational efficiency. Speak to our team today about how we can help.