What Is Banking-as-a-Service (BaaS)

Banking as a service (BaaS) is a model that allows companies to offer banking features without being banks.

Instead of building a bank from scratch, a company can connect to a licensed financial institution and use its infrastructure to provide services like accounts, cards, payments, and money movement.

In this setup, the bank operates in the background, handling regulation, compliance, and holding customer funds, while the company controls the app or platform that people interact with.

This model is commonly referred to as banking as a service, and it is becoming a core part of modern financial infrastructure.

This shift means that banking is no longer limited to banks. Financial services can now be built into apps, platforms, and digital products across many industries.

In Simple Terms

Banking as a service means a company can offer banking features without being a bank.

Instead of creating a bank, the company uses a licensed bank behind the scenes and focuses on the app or service you use.

For example, an app can give you a card or an account, but the money is held by a real bank in the background.

You use the app, and the bank powers it.

What Changed (Before vs Now)

In the past, only banks could offer banking services. If you wanted an account, a card, or a way to move money, you had to go directly to a bank.

Banks controlled everything:

• Accounts
• Cards
• Payments
• Customer relationships

This created a system where financial services were centralized inside banks, with limited flexibility and slower innovation.

Today, that model is changing.

With banking as a service, companies can build financial features into their own products by connecting to a licensed bank through modern infrastructure.

Instead of everything happening inside a bank:

• Apps and platforms create the user experience
• Infrastructure connects systems
• Banks handle regulation and hold funds

The shift is from a bank-controlled system to a platform-powered model, where financial services can exist inside apps, software, and digital platforms.

Traditional Banking vs Banking as a Service

Examples of BaaS

Banking as a service is already part of many everyday financial experiences, even if it is not always visible.

Common examples include:

• Apps offering debit cards linked to user accounts
• Platforms offering accounts inside their ecosystem
• Marketplaces enabling payments and transfers between users
• Business tools integrating payments, payroll, and financial workflows

A clear real-world structure can be seen with a fintech app like Chime, which offers accounts and debit cards by working with sponsor banks such as The Bancorp Bank and Stride Bank, where customer funds are held and protected through deposit insurance provided by the Federal Deposit Insurance Corporation.

Infrastructure providers like SoFi Tech Solutions connect the systems and enable the service to function.

This structure shows how apps, infrastructure, and banks work together.

How Banking-as-a-Service Works

Banking as a service works by separating banking into different layers, with each one handling a specific role.

• Licensed banks hold deposits, manage compliance, and operate under financial regulations, including providing FDIC insurance for customer funds
• Infrastructure providers connect systems through APIs, allowing platforms to access banking functions like account creation, card issuing, and payments
• Platforms and apps build the user experience, creating the interface that customers interact with

This structure allows companies to offer banking features without becoming banks.

Instead of building everything from scratch, a company can:

• Connect to a licensed bank
• Use infrastructure to access banking capabilities
• Focus on building a better product for users

The result is a system where banking becomes a service that can be integrated into almost any app or platform.

This type of infrastructure also supports lending products, where loan management systems handle what happens after a loan is issued, as explained in Loan Management Systems Powering Modern Lending Platforms.

Key Players and Competitors

Banking as a service is powered by infrastructure companies that connect apps to licensed banks, making it possible to launch financial products without becoming a bank.

A key company connected to this model in Utah is SoFi Tech Solutions, which provides APIs and financial infrastructure used by fintechs and digital platforms.

Other companies operating in this space include:

• Stripe (Treasury), which offers banking capabilities to businesses through its platform
• Unit, which helps companies launch financial products by connecting them to partner banks
• Treasury Prime, which provides APIs for account creation, payments, and bank integrations
• Solaris, which operates a similar model in Europe

These companies play a central role in enabling platform-based banking, allowing apps and businesses to offer financial services without becoming banks themselves.

Why It Matters

Banking as a service is changing how financial services are created and delivered.

Instead of relying only on banks, companies can now build financial features directly into their products, creating new types of experiences for users.

This shift leads to:

• Faster innovation, as companies can launch financial features more quickly
• More competition, as new players enter the market
• More tailored products, designed for specific industries and use cases
• Lower barriers to entry, reducing the need to build a bank from scratch

For users, this means that banking becomes more accessible and integrated into everyday tools.

Instead of going to a bank for every financial need, people can manage money inside the apps and platforms they already use, reflecting the shift toward digital-first banking experiences. For a deeper explanation, see Digital-First Banking: How Online Platforms Are Changing.

This is turning banking from a destination into a built-in feature of digital experiences.

BaaS and Embedded Finance

Banking as a service is closely connected to embedded finance, which is explained in Embedded Finance: How Financial Services Are Moving Inside Apps.

Embedded finance is the user-facing result, while BaaS is part of the infrastructure behind it.

BaaS makes it possible for companies to:

• Add accounts, cards, and payments to their products
• Integrate financial features directly into apps
• Deliver financial services without becoming banks

In other words, embedded finance is what users see, and banking as a service is what makes it possible behind the scenes.

BaaS and Open Finance

Banking as a service is also connected to open finance, which is explained in Open Finance: How Financial Data Becomes Shareable and Portable.

While BaaS focuses on delivering financial services, open finance focuses on sharing financial data across platforms.

Together, they enable:

• Connected financial experiences, where data and services move between apps
• More personalized products, built using real financial information
• Greater flexibility, allowing users to access services across different platforms

In simple terms, open finance allows data to move, and banking as a service allows services to be delivered.

Limitations

Banking as a service introduces new possibilities, but it also comes with tradeoffs.

• Dependence on partner banks, since companies rely on licensed banks to hold funds and handle compliance
• Regulatory complexity, as financial services must follow strict rules across different jurisdictions
• Reliance on third-party infrastructure, which can create dependencies on external providers
• Operational risks, especially when multiple systems and integrations are involved

These factors mean that while BaaS makes it easier to build financial products, it also requires coordination between multiple parties.

In many cases, companies are not fully in control of the entire system, which can affect speed, flexibility, and risk management.

What’s Next (Future of BaaS)

Banking as a service is still evolving, and its role in financial services is expected to expand.

Several trends are shaping what comes next:

• More companies offering banking features, as financial tools become part of everyday products
• Deeper integration into apps and platforms, making banking more seamless and less visible
• Global expansion, as infrastructure and regulations develop across different markets
• Convergence with AI and data systems, as explained in AI in Finance: How Artificial Intelligence Is Changing Money, enabling more automated and personalized financial experiences

Over time, banking is likely to become even more embedded into digital experiences, where users interact with financial services without needing to go to a traditional bank.

This points toward a future where banking is not a place, but a capability that exists across platforms and industries.

Conclusion

Banking as a service represents a major shift in how financial services are built and delivered.

What used to be controlled entirely by banks is now distributed across platforms, infrastructure providers, and licensed banks, allowing companies to offer financial features without becoming banks themselves.

This change is not just technical. It is redefining who can offer banking and where financial services appear.

As a result, banking is becoming:

• More accessible, reaching users through the apps they already use
• More integrated, embedded into everyday digital experiences
• More flexible, adapting to different industries and use cases

Banking is no longer just something people go to. It is becoming something that is built into the products and services they use every day.

Disclaimer: Information in this article is for educational purposes and may change over time.

What Is Embedded Finance

Embedded finance is the shift where financial services are built directly into apps and platforms, instead of being accessed through a separate bank or financial institution.

Instead of going to a bank’s website or app to manage money, payments, lending, investing, and accounts now happen inside the apps people already use. These services are integrated into everyday digital experiences like shopping, driving, or running a business.

This shift aligns with digital-first banking, where financial services are designed to be accessed primarily through apps and online platforms. For a deeper explanation, see Digital-First Banking: How Online Platforms Are Changing.

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In Simple Terms

In simple terms, embedded finance means the bank comes to you instead of you going to the bank.

Before, if you wanted to pay, borrow, or manage money, you had to leave what you were doing and open a bank app.

Now, those same actions happen inside the app you are already using.

What Changed (Before vs Now)

For decades, financial services followed a separate, centralized model.

Before:

• You opened a bank account at a bank
• You used a bank app or branch for transactions
• Payments, loans, and accounts were controlled and delivered by banks directly
• Every financial action required switching to a financial institution

Now:

• Financial services are distributed across platforms
• Apps integrate payments, accounts, and lending directly
• Banks often operate behind the scenes
• Users interact with apps, not financial institutions

This shift moves finance from a standalone system to an embedded layer inside digital products.

Traditional banking vs embedded finance inside apps

Traditional banking vs embedded finance inside apps

Examples of Embedded Finance

Many of the most widely used apps already include embedded finance features.

• Uber lets drivers receive earnings, access payouts, and use a debit card within the app
• Shopify offers merchant accounts, payments, and business financing
• Amazon provides payments and credit options
• Robinhood combines investing, cash management, and payments

These companies are not traditional banks, yet they offer core financial services as part of their product experience.

A real-world example:

Drivers using Uber can receive earnings and use a debit card directly within the app. This experience is powered by fintech platforms like Branch, supported by banking partners such as Evolve Bank & Trust, and connected to payment networks like Mastercard. Some of these experiences also rely on payroll connections for income data, as explored in Payroll Connectivity: How Apps Access Income Data.

Another example highlights the infrastructure layer:

Chime relies on infrastructure from SoFi Tech Solutions to power accounts, payments, and card services, while partner banks handle the regulated banking layer.

These experiences depend on financial data being combined from multiple accounts into a single view, as explained in Financial Data Aggregation: The Rise of Connected Financial Data.

How Embedded Finance Works

Embedded finance depends on a multi-layered system of technology and partnerships.

At a high level, it works through:

• APIs and integrations that connect apps to financial services
• Fintech platforms that enable features like payments, accounts, and lending
• Banking partners that provide the regulated financial infrastructure, often through banking as a service.

A simplified way to think about it is in layers:

• App layer → where the user interacts (for example, a rideshare or shopping app)
• Fintech layer → where financial features are enabled and managed
• Bank layer → where money is held and regulated

These layers work together to deliver financial services inside apps without requiring users to interact with a traditional bank directly.

These systems increasingly rely on shared data through Open Finance: How Financial Data Is Becoming Shareable and Portable, which allows apps to access and use financial information across platforms.

In business environments, this type of integration can also include internal financial workflows such as invoice management and vendor payments inside software platforms, as seen in Accounts Payable Automation: The Shift to Automated Payments.

Key Players and Competitors

Embedded finance is supported by a mix of fintech platforms and infrastructure providers that enable apps to offer financial services.

Utah-based companies include:

• SoFi Tech Solutions — provides infrastructure that powers accounts, payments, and card issuing inside apps
• MX Technologies — supports financial data connectivity, insights, and user experience tools that enhance embedded financial features
• Atomic — enables payroll data access, income verification, and direct deposit switching

These companies focus on enabling other platforms to offer financial services, rather than offering them directly to consumers.

Competitors and similar providers include:

• Stripe — provides payments, issuing, and embedded financial services infrastructure
• Marqeta — enables card programs and embedded payment experiences
• Plaid — connects apps to financial accounts and data
• Adyen — supports payments and financial services across global platforms

Each of these companies provides part of the infrastructure needed to embed financial services into digital products.

Why It Matters

Embedded finance is changing how people interact with money by making financial services faster, simpler, and more integrated into everyday life.

• Faster and more convenient: Financial actions happen instantly within the app experience, without switching platforms
• Less friction: Users no longer need to open separate banking apps or re-enter information
• Expanded access: More people can access financial services through apps they already use
• Better user experience: Finance becomes part of a seamless digital journey instead of a separate task

This shift makes financial services more accessible and more aligned with how people already use digital products.

Embedded Finance in Utah

Utah plays a role in embedded finance by providing the infrastructure that powers financial features inside apps.

Companies like SoFi Tech Solutions, MX, and Atomic are based in Utah and support capabilities such as payments, account connections, and payroll-linked services.

Other companies, such as Plaid, also have operations in Utah, contributing to data connectivity and financial integrations.

Utah’s fintech ecosystem also includes companies focused on what happens after a transaction is completed, such as tracking, delivery, and issue resolution.  For a deeper look at that layer, see Post-Purchase Platforms: Managing Experience After Checkout.

This positions Utah as part of the underlying infrastructure that enables embedded finance.

Limitations

Despite its advantages, embedded finance has tradeoffs.

• Limited visibility: Users may not know which companies provide the service or where their money is held
• Multiple dependencies: The experience relies on fintech platforms, banks, and networks working together
• Complex backend: Several systems, integrations, and partners operate behind the scenes
• Reduced transparency: Fees, protections, and responsibilities are not always clear to the user
• Data sharing and privacy: Multiple providers may have access to user data, increasing exposure across different systems

Embedded finance simplifies the experience on the front end, but adds complexity behind the scenes.

What’s Next (Future of Embedded Finance)

Embedded finance is still evolving, with several trends shaping its future.

• More apps offering financial services: Financial features will continue expanding into non-financial platforms
• Deeper integration: Financial tools will become more personalized and built directly into user workflows
• AI + embedded finance: Automation will enable smarter payments, lending decisions, and financial management, as explained in AI in Finance: How Artificial Intelligence Is Changing Money
• Expansion across industries: Sectors like healthcare, real estate, and education are likely to adopt embedded finance models
• Small business financing integrated directly into platforms, including small business loan marketplaces

The direction is clear: financial services are becoming an invisible layer inside digital experiences.

Conclusion

Embedded finance represents a shift in how financial services are delivered.

Instead of going to a bank for every transaction, financial tools are now built directly into the apps people already use.

This moves finance from a separate destination to an integrated feature, powered by fintech platforms, infrastructure providers, and banking partners.

As this model expands, embedded finance is making financial services faster, more accessible, and more connected to everyday digital experiences.

Information is for educational purposes and may change over time.