Global Banking as a Service Market Size Likely to Expand at a CAGR of 15.82% By 2033

According to recent market research by the CMI Team, there will be a 15.82% CAGR in the size of the global banking as a service market from 2024 to 2033. In 2024, the market size is projected to reach a valuation of USD 26.13 Billion. By 2033, the valuation is anticipated to reach USD 97.99 Billion.

Banking as a Service Market: Growth Factors and Dynamics

• Digital Transformation: Financial institutions’ increasing adoption of digital technologies to enhance operational efficiency and customer experience drives the demand for a banking as a service solution.

• Regulatory Support: Favorable regulatory frameworks promoting open banking and data sharing facilitate the growth of banking as a service model, encouraging innovation and competition.

• Cost Efficiency: Banks and fintech companies leverage banking as a service to reduce infrastructure costs, streamline processes, and focus resources on core competencies.

• Scalability and Flexibility: BaaS enables scalable and flexible banking solutions, allowing financial institutions to adapt to changing market demands and customer preferences quickly.

• API Technology Advancements: Continuous advancements in API technology enable seamless integration across various financial services platforms, enhancing interoperability and expanding service offerings.

• Emerging Markets: Increasing penetration of digital banking services in emerging markets, driven by rising smartphone adoption and internet penetration, fuels the demand for banking as a service solution.

• Partnerships and Collaborations: Collaborations between traditional banks, fintech startups, and technology providers to co-create innovative banking solutions contribute to market expansion and product innovation in the BaaS sector.

Banking as a Service Market: Merger and New Product Launch

• In June 2024, The National Bank of Canada agreed to acquire Canadian Western Bank, based in Edmonton, Alberta. This merger combines two banks with expanding operations, aiming to provide customers with a broader range of products and services on a national level while maintaining a strong regional presence.

• In May 2024, FIS, a prominent player in financial technology worldwide, launched Atelio by FIS, a fintech platform designed to integrate financial services directly into the offerings of financial institutions, businesses, and software developers.

• In January 2023, Accenture announced its intent to acquire SKS Group, a consulting firm specializing in aiding banks throughout Germany, Austria, and Switzerland in modernizing their technology infrastructure. SKS Group focuses particularly on leveraging SAP S/4HANA solutions to address regulatory requirements. The financial terms of the acquisition have not been disclosed.

Report Scope

Banking as a Service Market: COVID-19 Analysis

The COVID-19 pandemic has significantly impacted the Banking as a Service Market, with the industry experiencing both positive and negative effects. Here are some of the key impacts:

• Disruption in International Trade and Businesses: The ongoing COVID-19 pandemic has disrupted international trade and businesses, significantly affecting market dynamics. Governments have imposed restrictions on the transit of people and goods, disrupting supply chains and financial services operations.

• Demand Fluctuations: The pandemic led to disruptions in various industries, including electronics, automotive, aerospace, and healthcare, major consumers of Banking as a Service (BaaS) solutions. Lockdown measures, supply chain disruptions, and reduced consumer spending slowed economic activities across these sectors. Many ongoing projects were delayed or put on hold due to uncertainties surrounding the pandemic, reducing demand for BaaS services.

• Regulatory Framework and Market Restraints: The pandemic may have influenced the regulatory framework surrounding the banking industry, with potential changes in compliance standards and regulations affecting market operations. Economic uncertainties resulting from the pandemic have posed challenges such as high operational costs, technical limitations, and a lack of skilled workforce, restraining market growth.

• Operational Challenges: Implementing health and safety protocols in financial institutions added operational challenges and increased production costs. Labor shortages and workforce disruptions affected service capacities and efficiency, including illness-related absences and quarantine measures.

• Adaptive Strategies and Focus on Innovation: Companies adopted remote work arrangements, digitalized customer service efforts, and diversified supply chain sources to mitigate the pandemic’s impact. Some firms directed efforts toward innovating BaaS solutions to meet the increased demand for digital banking and financial services during the pandemic.

• Technological Advancements: Ongoing advancements in financial technology, such as improved cybersecurity measures, enhanced digital payment systems, and broader integration capabilities, are opening doors to new applications and expanding the market potential.

• Automation Push: The pandemic highlighted the importance of automation in banking processes to minimize reliance on human labor. This could have led to a slight increase in demand for BaaS solutions in specific applications, such as automated transaction processing and digital customer onboarding in operational sectors.

In conclusion, the COVID-19 pandemic has had a mixed impact on the banking service market, with some challenges and opportunities arising from the pandemic.

List of the prominent players in the Banking as a Service Market:

• Solarisbank AG
• BBVA Open Platform
• Green Dot Corporation
• Bankable
• Marqeta
• Railsbank
• Finastra
• Galileo Financial Technologies
• Synapse
• ClearBank
• Treezor
• Fidor Bank
• Starling Bank
• Q2 Holdings
• Plaid
• Others

The Banking as a Service Market is segmented as follows:

By Component

• Platform
• Services

By Product Type

• API-Based Banking-as-a-Service
• Cloud-Based Banking-as-a-Service

By Enterprise Size

• Large Enterprises
• Small & Medium Enterprises

By End Users

• Banks
• NBFC
• Government
• Others

Regional Coverage:

North America

• U.S.
• Canada
• Mexico
• Rest of North America

Europe

• Germany
• France
• U.K.
• Russia
• Italy
• Spain
• Netherlands
• Rest of Europe

Asia Pacific

• China
• Japan
• India
• New Zealand
• Australia
• South Korea
• Taiwan
• Rest of Asia Pacific

The Middle East & Africa

• Saudi Arabia
• UAE
• Egypt
• Kuwait
• South Africa
• Rest of the Middle East & Africa

Latin America

• Brazil
• Argentina
• Rest of Latin America