What Has Driven the Growth of the Banking-As-A-Service (BaaS) Market in Recent Years?
The banking-as-a-service (baas) market has seen considerable growth due to a variety of factors.
•The market for banking-as-a-service (BaaS) has witnessed a significant expansion in the past few years. The market value, which is expected to be $716 billion in 2024, is projected to escalate to $842.44 billion in 2025, registering a compound annual growth rate (CAGR) of 17.7%.
The remarkable development in the past era has been driven by various factors including an increased inclination towards digital banking services, a heightened demand for customized financial services, an escalating requirement for integrated financial solutions, a surge in global trade and globalization, and a rise in regulatory compliances.
What is the Market Size Forecast for the Banking-As-A-Service (BaaS) Market?
The banking-as-a-service (baas) market is expected to maintain its strong growth trajectory in upcoming years.
• The market size of banking-as-a-service (BaaS) is predicted to experience a significant surge in the upcoming years, potentially reaching $1829.95 billion by 2029, with a compound annual growth rate (CAGR) of 21.4%.
This projected escalation during the forecast period can be traced back to increased demand for in-built finance solutions, market proliferation and global diversification, heightened attention to risk management, a surge in need for digital banking services, and the effects of geopolitical happenings and revisions in regulations. Key anticipated trends within the forecast period encompass increased uptake of strategies by primary market players, technological progression in BaaS solutions, incorporation of safety and quality management features in BaaS products, the establishment of standardised APIs (Application Programming Interfaces), and greater cooperation among traditional banking institutions, fintech companies, and non-financial firms.
What Factors Are Driving Growth In The Banking-As-A-Service (BaaS) Market?
The increasing acceptance of digital banking is predicted to drive the growth of the banking-as-a-service (BaaS) market in the future. Digital banking involves using computers to connect to a bank's website and access its features and services. The rise of digital banking has spurred the growth of the BaaS industry by meeting customer needs for accessible and customized financial services, providing smooth integrations, quicker time-to-market, and cost-effective scalability for banks. For example, the European Central Bank reported in November 2023 that a Germany-based Central bank recorded a 8.8% increase to 65.9 billion in the total number of non-cash payments in the European area in the second half of 2022 compared to the first half of the year. There was a 2.8% increase in the total value of these transactions, hitting €118.8 ($128.55) trillion. Therefore, the acceptance of digital banking is fuelling the growth of the banking-as-a-service (BaaS) market.
What Are The Main Segments Of The Global Banking-As-A-Service (BaaS) Market?
The banking-as-a-service (BaaS) market covered in this report is segmented –
1) By Type: API-Based Bank-As-A-Service, Cloud-Based Bank-As-A-Service
2) By Component: Platform, Services
3) By Enterprise: Large Enterprise, Small And Medium Enterprise
4) By End User: Banks, Non-Bank Financial Company (NBFC), Government, Other End-Users
Subsegments:
1) By API-Based Bank-As-A-Service: Payment Processing APIs, Account Management APIs, Compliance And Identity Verification APIs
2) By Cloud-Based Bank-As-A-Service: Core Banking Solutions, Digital Banking Platforms, Customer Relationship Management (CRM) Systems
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What Emerging Trends Are Influencing The Growth Of The Banking-As-A-Service (BaaS) Market?
The rising trend of cloud-native architecture is becoming increasingly visible in the banking-as-a-service sector. Essentially, cloud-native architecture is a software development and deployment strategy which specifically exploits the advantages and benefits offered by cloud computing environments. Businesses in the banking-as-a-service (BaaS) market are progressively embracing this architecture to construct and offer their services, thereby retaining their market position. To illustrate, in February 2023, Oracle, an American cloud technology firm, introduced Oracle Banking Cloud Services. This is a new package of divisible, combinable cloud-native services like banking accounts cloud service, banking payments cloud service, banking enterprise limits and collateral management cloud service, banking origination cloud service, banking digital experience cloud service, and banking APIs cloud service. Banks now have access to six new services that facilitate the scaling of corporate demand deposit processing, an enterprise-wide limit and collateral management, real-time global payments, API management, retail customer onboarding, and self-service digital experiences. These services make it possible for banks to rapidly and securely modernise their business capabilities via a microservices architecture.
Who Are the Key Players in the Banking-As-A-Service (BaaS) Market?
Major companies operating in the banking-as-a-service (BaaS) market include:
• Banco Bilbao Vizcaya Argentaria S.A.
• PayPal Holdings Inc.
• Square Inc.
• Green Dot Corporation
• Paytm Payments Bank
• Marqeta Inc.
• Starling Bank Ltd.
• Cross River Bank
• Mambu GmbH
• 10x Future Technologies
• ClearBank Ltd.
• Currency Cloud
• Thought Machine
• Railsbank Technology Ltd.
• FinXact
• MatchMove Pay Pte. Ltd.
• Fidor Bank AG
• Bnkbl Ltd.
• Treezor SAS
• Bankable
• Treasury Prime
• Movencorp Inc.
• Bankifi
• Solaris Bank LLC
• Project Imagine Ltd.
What Is The Most Dominant Region In The Banking-As-A-Service (BaaS) Market?
North America was the largest region in the banking-as-a-service (BaaS) market in 2024. Asia-Pacific is expected to be the fastest-growing region in the forecast period. The regions covered in the banking-as-a-service (BaaS) market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa
