Confusion, Cost, and Compliance: The Bifurcation of BaaS and Embedded Banking

A banking license and full-stack APIs are critical to harnessing the promise of embedded banking.  

11 October 2022 – Banking-as-a-Service (BaaS) allows a service provider to offer licensed financial products and includes the necessary financial protections and regulatory compliance. Embedded banking, on the other hand, is best described as the direct incorporation of BaaS capabilities into the user experience in a transparent manner. The holder of a banking license or a bank agency designation must manage the provisioning of banking products through embedded banking to comply with regulatory requirements.

This report identifies how the confusion between BaaS and embedded banking affects fintech players, how poor BaaS providers have impacted their businesses, and whether this has motivated them to upgrade their BaaS and embedded banking offerings or providers. The research was conducted via a questionnaire and follow-up telephone interviews conducted between June and September 2022 with 20 fintech providers operating across Europe.

This 26-page Impact Report contains 14 figures and one table. Clients of Aite-Novarica Group’s Commercial Banking & Payments service can download this report and the corresponding charts.

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