US Banking-as-a-Service Market- Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

US Banking-as-a-Service Market can be segmented By Component (Platform and Service (Professional Service and Managed Service)), by Type (API based BaaS and Cloud-based BaaS), By Enterprise Size (Large enterprise and Small & Medium enterprise), By End-user (Banks, NBFC/Fintech Corporations and Others).

Market Snapshot

US Banking-as-a-Service Market Size
Study Period: 2018-2027
Base Year: 2021
CAGR: 9 %
US Banking-as-a-Service Market Major Players

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Market Overview

The Covid-19 pandemic has resulted in increased adoption of Banking-as-a-Service for non-banking businesses. People have progressively utilized e-commerce platform solutions during the epidemic, resulting in an increase in online payment technologies. Financial institutions have demonstrated a strong interest in banking as a service to improve business processes and deliver secure contactless payments since the Pandemic.

Banking-as-a-Service Market systems have evolved as a key component of open banking, which allows third parties to establish new services using banks' application programming interfaces (APIs), providing account holders with more financial transparency options. This technology is revolutionizing retail banking, redefining incumbents' customer relationships, and making it easier for fintech to enter the market. The need for banking-as-a-service (BaaS) platforms is rapidly increasing in the United States, owing to the country's expanding financial market and expanding insurance industries. Digital banking in the United States has undergone substantial transformation and expansion in recent years, with over 70 digital banking platforms introduced since 2018, fueling the growth of BaaS platforms in the country. The demand for banking-as-a-service (BaaS) platforms in the United States is predicted to grow at a rapid rate over the forecast period. Big data, platform business models, advanced analytics, smartphone technology, and peer-to-peer networks are rapidly driving the US economy. At the same time, financial sector innovation is transforming the market drastically.

Application programming interfaces (APIs) have proven to be a lifesaver for banks, since they have simplified digital transitions and allowed for faster pivots and innovations. FinTechs and other third-party service providers (TPSP) can assist banks provide consumers with a transparent, smooth, and tailored financial service in addition to their conventional banking services by using APIs which will further increase the demand for banking-as-a-service in the future.

Scope of the Report

Banking as a Service (BaaS) is a paradigm in which licensed banks incorporate their digital banking services directly into non-bank firms' products. This allows non-bank businesses to provide digital banking services to their consumers, such as mobile bank accounts, debit cards, loans, and payment services, without having to obtain their own banking license. This report aims to provide a detailed analysis of the US Banking-as-a-Service Market. It focuses on the market dynamics, emerging trends in the segments, the future of markets, and insights on various drivers and restraints. Also, it analyses the key players and the competitive landscape in the market. US Banking-as-a-Service Market can be segmented By Component (Platform and Service (Professional Service and Managed Service)), by Type (API based BaaS and Cloud-based BaaS), By Enterprise Size (Large enterprise and Small & Medium enterprise), By End-user (Banks, NBFC/Fintech Corporations and Others).

By Component
Platform
Services
Professional Service
Managed Service
By Type
API Based BaaS
Cloud Based BaaS
By Enterprise
Large Enterprise
Small and Medium Enterprise
By End User
Banks
Fintechs Corporations/NBFC
Others

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Key Market Trends

The Increasing Digital Banking Adoption in US is Driving the Market

BaaS can assist non-banking and fintech organizations in providing online banking services to their clients. They may concentrate on improving their services rather than worrying about bank licenses, regulatory regulations, and other integrations. For their customers, these user-friendly and technologically advanced products provide a better option than traditional banking. With the use of the Banking-as-a-Service, non-banking organizations such as airlines can also offer their customers digital banking services such as mobile bank accounts, debit cards, loans, and payment services, without needing to acquire a banking license of their own, and instead, they can focus on their other core businesses. This increased digital banking adoption by other non-banking organizations in the United States is driving the market for the Banking-as-a-Service industry.

US Banking-as-a-Service Market Share

United States is Leader in Open Banking and Open Finance API Adoption

To diversify their revenue streams, banks might use APIs to share data with third-party financial organizations. According to the Cash-free Payment blog, 43% of banks prefer the BaaS model, which allows them to collect fees every API transaction. The BaaS approach benefits fintech companies by allowing them to launch their businesses faster and increasing client trust. Customers trust banks to look after their financial well-being over time, therefore fintech companies partner with banks to capitalize on this confidence and grow their customer base. The Financial Data Exchange (FDX) has announced that its FDX API is currently being used by 16 million North American users for open banking and open finance data exchange.

US Banking-as-a-Service Market Growth

Competitive Landscape

BaaS is gaining traction in the US market as companies of all stripes jump into the fight in search of new revenue, data-sharing opportunities, and insights that will help them improve their own offers in the future. However, no single player dominates the industry, and providers seek to gain a competitive advantage in terms of service breadth and depth, reputation, speed to market, and scalability. In recent years, BaaS companies have focused on venture capital investments, with the funding allowing them to improve their product offerings and market position. A large number of US-based players have their presence on global Banking-as-a-Service market.

Recent Development

  • In July 2021, Dwolla has raised USD 21 million in funding, which it will use to expand the functionality of its service, particularly in terms of how it integrates and provides more responsiveness to card payments; hire more talent; and begin the process of expanding its rails to more markets outside of the United States, with a focus on Canada, the United Kingdom, and Australia.
  • In December 2021, Payment Gaint Square change its corporate name to Block, effective December 10. Square is expanding outside its basic credit card reader business, focusing on new technologies like blockchain which resulted in a change in its name.

Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Assumptions and Market Definition

    2. 1.2 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET INSIGHTS AND DYNAMICS

    1. 4.1 Market Overview

    2. 4.2 Market Driver

    3. 4.3 Market Restraints

    4. 4.4 Porters 5 Force Analysis

      1. 4.4.1 Threat of New Entrants

      2. 4.4.2 Bargaining Power of Buyers/Consumers

      3. 4.4.3 Bargaining Power of Suppliers

      4. 4.4.4 Threat of Substitute Products

      5. 4.4.5 Intensity of Competitive Rivalry

    5. 4.5 Insight on Technologial Adoption in the Market

    6. 4.6 Insight on Various Government Regulations in the Market

    7. 4.7 Impact of Covid 19 on market

  5. 5. MARKET SEGMENTATION

    1. 5.1 By Component

      1. 5.1.1 Platform

      2. 5.1.2 Services

        1. 5.1.2.1 Professional Service

        2. 5.1.2.2 Managed Service

    2. 5.2 By Type

      1. 5.2.1 API Based BaaS

      2. 5.2.2 Cloud Based BaaS

    3. 5.3 By Enterprise

      1. 5.3.1 Large Enterprise

      2. 5.3.2 Small and Medium Enterprise

    4. 5.4 By End User

      1. 5.4.1 Banks

      2. 5.4.2 Fintechs Corporations/NBFC

      3. 5.4.3 Others

  6. 6. COMPETITIVE LANDSCAPE

    1. 6.1 Market Concentration Overview

    2. 6.2 Company Profiles

      1. 6.2.1 Braintree

      2. 6.2.2 Boku

      3. 6.2.3 Dwolla

      4. 6.2.4 Square Inc

      5. 6.2.5 Treasury Prime

      6. 6.2.6 Moven

      7. 6.2.7 Green Dot

      8. 6.2.8 Synapse

      9. 6.2.9 Galileo

      10. 6.2.10 Marqeta*

    3. *List Not Exhaustive
  7. 7. MARKET OPPORTUNITIES AND FUTURE TRENDS

  8. 8. DISCLAIMER AND ABOUT US

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Frequently Asked Questions

The US Banking-as-a-Service Market market is studied from 2018 - 2027.

The US Banking-as-a-Service Market is growing at a CAGR of 9% over the next 5 years.

Braintree, BOKU, Dwolla, Square Inc, Treasury Prime are the major companies operating in US Banking-as-a-Service Market.

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