Banking As A Service (BaaS): What It Is & How It Works

Banking as a service (BaaS) describes how financial services are delivered behind the scenes. But what is BaaS, and how does it work?

Understanding BaaS can help you better evaluate modern banking platforms and financial tools, and see how it impacts the services your business relies on.

What Is Banking As A Service?

Banking as a service (BaaS) is a model that allows fintech companies to offer banking services by connecting to licensed banks through technology.

Fintech companies partner with banks to provide products such as business accounts, payment cards, and lending services through their platforms. This model allows fintech apps to integrate financial services directly into their products, helping businesses manage their finances more efficiently.

BaaS relies on APIs to deliver services through another platform rather than directly to end users. These APIs connect fintech apps to banking infrastructure, enabling features such as accounts, payments, and card issuing.

BaaS is a rapidly evolving part of the financial services industry. If your business uses a fintech banking platform or a corporate card provider, you may already be using products built on BaaS.

How Does Banking As A Service Work?

Banking as a service works by connecting fintech platforms to licensed banks through APIs.

Fintech companies use these connections to offer financial products such as accounts, payments, and card services within their own platforms. This allows businesses to access banking features without interacting directly with a traditional bank interface.

Rather than replacing banks, BaaS changes how banking services are delivered, often through digital-first platforms powered by underlying bank infrastructure.

If you’re considering a fintech platform built on BaaS, it’s important to make sure it partners with a licensed, regulated bank that provides FDIC insurance for eligible deposits.

Examples Of Banking As A Service

Banking as a service is a rapidly evolving part of the financial services industry, and not all companies use the term directly. In general, BaaS providers offer the infrastructure that connects fintech platforms to licensed banks through APIs.

This model allows fintech platforms, banks, and service providers to work together to deliver financial products through integrated platforms.

The following examples highlight companies that either provide BaaS infrastructure or build products using BaaS.

What Is Embedded Finance?

Embedded finance refers to the integration of financial services — such as payments, lending, insurance, or banking features — into nonfinancial platforms.

For example, Uber is a transportation company, but its app includes built-in payment processing, allowing you to pay for rides without leaving the platform.

Another example is buy now, pay later (BNPL). When shopping online, you may see options from providers like Affirm, Afterpay, or Klarna integrated directly into the checkout experience. These financing options are embedded into the platform, even if you choose not to use them.

While embedded finance and banking as a service (BaaS) are closely related, there are some key differences.

Embedded Finance VS Banking As A Service

Embedded finance and banking as a service (BaaS) are closely related, but they play different roles. Embedded finance refers to the user-facing experience — financial tools built directly into a platform — while BaaS provides the underlying infrastructure that makes those features possible.

In most cases, embedded finance relies on BaaS behind the scenes. The chart below highlights the key differences.

The Bottom Line: Can Banking As A Service Benefit Your Small Business?

Business banking continues to evolve, and banking as a service plays a key role in how many modern financial platforms are built.

Fintech companies are changing how financial services are delivered, offering more flexible tools and, in some cases, lower costs for businesses.

If your small business hasn’t recently reevaluated its banking setup, it may be worth exploring other options. New platforms can help streamline your finances, improve visibility, and simplify everyday tasks.

That doesn’t mean you need to leave your current bank behind. Instead, take time to understand what’s available and how different tools might fit your needs.

Start by browsing our list of the best business bank accounts to compare your options. You may find a platform that better supports how your business operates today.