The Banking-as-a-Service 2.0 report is an in-depth analysis of the fast-evolving BaaS segment. In this report, we analyze the global landscape of specialized FinTech companies and banks that have BaaS as core to their business, funding and investment patterns since 2018, regulatory & market drivers, and a host of industry expert opinions.

1. NOVEMBER 2020

2. BANKING-AS-A-SERVICE 2.0
Preface [1/2]
2
When we put together the first edition of this
report in 2019, banks were still leading the
charge in Banking-as-a-Service (BaaS), while
there were only a handful of FinTech companies
focused on this business model. A year later, the
scenario has turned on its head. Today, there are
well over 50 companies globally focused on pure-
play BaaS as their core business. Many more are
in the making. The promise that BaaS holds can
be validated in the massive growth prospects for
embedded financial services. As per some
estimates, the overall global market size of
Embedded Finance is expected to more than
double to over $7 trillion* by 2030. BaaS has a
critical role to play in making that happen.
BaaS abstracts the complexity of banking
products and processes, making them easily
accessible and consumable to third-party
enterprises, regardless of whether their core
business is financial services. Traditional banks
cannot move at the agile pace that modern digital
enterprises demand. At the same time, banks
have the infrastructure and governance models
to meet compliance requirements and last-mile
market integrations. BaaS combines the best of
both aspects, ensures innovation, and
enables faster go-to-market. Today, we see
high-scale retail and e-commerce businesses
successfully launching cards and lending
products in partnership with BaaS companies.
The entire European merchant network
acquisition of a FinTech giant like Alipay is
facilitated by Solarisbank, one of the pioneers of
the BaaS model.
Growth Motivations
The reason for the growth of BaaS in the last two
years is twofold.
Firstly, banks, which have the onus of running the
underpinning services, are starting to mature in
their delivery and governance of these
partnerships. The earliest set of services that
were offered mostly focused on payments, and
basic account services are now table stakes. The
focus has now shifted to services and
orchestrated operations that are more complex in
nature, e.g., lending and issuance of payment
instruments.
Secondly, companies that were hitherto focused
on niche services such as data aggregation and
payment services are now extending their
platform’s capabilities to other core functions
such as opening an account, card issuance, and
lending. Finally, the differentiated licenses
offered by regulatory authorities in some
countries have made it easier for FinTech
companies to become licensed account
providers and offer BaaS services in those
markets. In the EU, markets like Malta and
Lithuania have eased the barriers to procure
electronic money licenses.
This has made it easier for several payment
service provider companies to expand into
Europe by offering account services.
Role of Regulation & Industry
Initiatives
The evolution of regulations, guidelines, and
market-driven initiatives in several geographies
has also indirectly led to optimism in BaaS.
Although the initial focus of most of the directives
such as PSD2 is purely open data and payments,
it has prompted banks to re-architect and offer
value-added services in the form of APIs, e.g.,
KYC and CDD services. From the point of view of
banks, this is essential to stay competitive and
see a return on their investment. However, they
could also be the perfect foil to BaaS businesses
that are hungry to scale into new capabilities. In
Hong Kong, standardization of APIs in future
phases of its Open Banking rollout is expected to
address registration and account onboarding as
a standardized service. Although Open Banking is
not enforced as a mandate in India, UPI’s success
has prompted the ecosystem to collaborate and
work on standardizing access to credit. BaaS
companies play a crucial role in connecting
consumer enterprises with banks in each of
these cases.
Note: *Simon Torrance and Matt Harris (Bain Ventures)

3. BANKING-AS-A-SERVICE 2.0
Preface [2/2]
3
Funding Activity and Global Heat Map
We analyzed private funding and investments in
the BaaS segment for the past three years since
activity in BaaS picked up pace. Since 2019,
there has been an upswing in investor activity in
the BaaS segment. Angel and institutional
funding in 2019 were 2X that in 2018. Contrary to
what one would expect, the magnitude of funding
in 2020 (as of writing this report) is almost close
to the 2019 levels, indicating the growing interest
in this business model despite all odds.
The earliest developments in the API economy
happened in the US and European markets
toward the later part of the last decade. Hence,
unsurprisingly, even today, BaaS activity is
concentrated in these two markets. The largest
concentration of BaaS platforms is in the
Americas, followed by Europe (including the UK).
Over the last couple of years, Brazil has seen a
spurt in new companies buoyed by the overall
growth of FinTech and the consequent demand.
Even though Asia as a region still lags globally,
BaaS platforms in India have registered
impressive growth statistics, most of them
powering upcoming neobanks and a host of other
retail and e-commerce businesses.
Partnerships and Acquisitions
Partnerships are at the heart of Banking-as-a
Service. Some of the best win-win situations are
demonstrated by banks. The BaaS platform
underpinning RazorpayX (Razorpay’s SME
neobanking platform, one of the most widely
used payment gateways in India) runs atop
services offered by RBL Bank. Solarisbank
(Germany) powers the European business of both
Alipay and Samsung Pay. Several neobanks
worldwide are now powered by BaaS platforms.
Aspire, a Singapore-based SME neobank, has
partnered with Railsbank to offer bank accounts
in SGD. Rayo, an immigrant-focused digital
banking startup in the US, has partnered with
Nium.
During our research, we spoke to several
FinTechs and banks that run BaaS platforms.
While it is true that the consumer side of the
ecosystem expects banks to open up at scale,
banks have learned to take a measured approach
giving due weightage to the financial stability and
business sustainability of their partners. Even
though this might make banks look passive in
building partnerships, it could well be in the best
interest of the entire ecosystem.
There is also an emerging M&A trend in BaaS, as
indicated by important acquisitions in 2019
and 2020. Acquisitions are an important vehicle
for BaaS companies that have global ambitions to
move into new markets. Galileo’s acquisition by
SoFi is expected to set the trend of large
FinTechs scaling inorganically by acquiring BaaS
platforms.
Classification of BaaS for This Report
By virtue of the way it functions, there is a
tendency to categorize various enterprises, which
expose APIs for their services, into BaaS. For the
purpose of this report, we have adopted a
double-filtered approach and included only those
companies that facilitate the creation of an
account store or a card with additional services
on top of them. These could be current accounts,
loan accounts, or cards with extended services
like payments over them. We have excluded pure-
play data aggregation platforms and pure-play
Open Banking platforms and API Management
Platforms that do not necessarily have market
partners.
We hope you find this report insightful.
19
1
18
8
2018 2019 2020
$281.2 Mn $623.7 Mn $579.9 Mn
YoY BaaS Funding
BaaS Global Presence

4. BANKING-AS-A-SERVICE 2.0
Research Methodology
4
The Banking-as-a-Service 2.0 report is a comprehensive study based on MEDICI’s proprietary FinTech data on startups, deep market intelligence derived from
years of tracking this segment, and secondary research that was refined through brainstorming sessions. We reinforced our inferences for this report by means
of in-depth interviews with segment experts to extract valuable market signals from the noise, identify market trends, and develop viewpoints.
MEDICI has ample information in both quantitative and qualitative forms, which is curated by our industry analysts and market engagement initiatives. In
the secondary research process, we conducted an in-depth study of the global BaaS landscape by identifying and understanding the key stakeholders, drivers,
trends, challenges, and opportunities. The key sources referred to for secondary research spanned across company and industry reports, press releases,
government and other official sources, national and international databases, and our partners, among others, to facilitate valuable data-driven insights.
Primary research formed the most crucial source of information gathered for this study. It complements secondary research with insights from veterans in
the banking industry, founders of BaaS companies, venture capitalists, and other industry influencers. Over a period of two months, 10+ interviews were
conducted with industry experts to gain the latest and valuable insights offered in the report.
Qualitative and quantitative findings and insights from these research stages were curated by MEDICI analysts to present a comprehensive view of the BaaS
landscape. These were further refined through MEDICI’s years of experience in deeply tracking industry developments and bringing together the ecosystem.
Qualification as BaaS and Exclusions
By virtue of the way it functions, there is a tendency to include enterprises that expose APIs for their services in the BaaS category. For the purpose of
this report, we have adopted a double-filtered approach and included only those companies that facilitate the creation of an account store or a card
with additional services on top of them. These could be current accounts, loan accounts, or cards with extended services like payments over them.
Accordingly, Lending-as-a-Service companies that provide end-to-end lending services, such as loan management and compliance, find a place in
this report. In addition, we have included only those companies that have established back-end partnerships with banks, card schemes, and payment
networks. This means pure-play data aggregation platforms and pure Open Banking platforms do not feature in this report. While some Open Banking
platforms have a global presence and do provide market integrations with banks for payments (mostly PSD2-led in the EU), we prefer to qualify them
as financial infrastructure API platforms and not full-fledged BaaS. ‘As-a-Service’ platforms in the insurance and wealth sectors have also been
excluded.
In the coming months, we will be publishing a separate report on financial infrastructure API platforms that include
Open Banking platforms and market and bank data aggregators.

5. BANKING-AS-A-SERVICE 2.0
Banking-as-a-Service — The Hottest Thing
in Town
Banking-as-a-Service (BaaS) may be the hottest
thing in town, but it has not happened by accident
or luck. And nor is it fashion or a fad which will
ultimately fizzle out. BaaS is the result of an initial
wave of FinTech ideology that has caused a
revolution and whose impact has been felt across
the whole global financial services sector. And it is
here to stay.
However, the first wave of FinTech experienced real
headaches when connecting to financial services
infrastructure, which was Byzantine at best.
Examples of the ‘headaches’ were time taken, cost,
unavailability of decent APIs, having to put together
different pieces, complexity, reliability, and
scalability across borders.
Banking-as-a-Service and its derivatives, such as
Cards-as-a-Service and Credit-as-a-Service, were
born to solve these issues to provide a “financial
layer” of the internet in a very similar way that AWS
provides the “data room layer” of the internet.
Banking-as-a-Service can mean different things to
different people, so we work within our own clear
definitions and perimeters. We consider
ourselves a truly digital BaaS platform, and our
offering has four fundamental objectives:
• Keep up with our customers who consume a
product at a pace. Our customers can be up
and running with real-money and accounts in
minutes using our PLAYLive sandbox. Fully
functional prototypes can be built by customers
in under four days, and new products can be
launched to market in under eight weeks. We
are the fastest in the market.
• Ensure that new products and features are
launched at lightspeed. We complete up to 10
feature releases a week and are moving to
multiple feature releases a day.
• Operate on a global scale. We have built an
“industry stack” that can be tuned to local
markets and regulations; we can ready a new
country in three months.
• To deliver value and not features. Our
customers have distinct aspirations, for
example, “launch a wage-advancing business ”
and “embed top-up savings in the checkout
experience.” We do not focus on features, such
as the number of payments, types of payments,
or technical mumbo-jumbo on cards.
Customers buy value.
In broader terms, BaaS has revitalized the core.
Witness the huge momentum that has seen the
opening up of the banking and finance world to
APIs. And it is the APIs that have driven the journey
from Open Banking to embedded finance.
The industry quickly grasped ‘Open Banking’ as a
term that embraced the sense of excitement that
we all felt as things began to open up and change.
Yet, Open Banking is only really about two core
services: account data and payment initiation.
Whereas embedded finance is about so much
more: Open Banking with, for example, issuing
cards and accounts, currency conversion, multiple
payment schemes, and collecting money.
The impact that BaaS is having, and will have over
the coming decades, cannot be stressed too
highly. BaaS is a game-changer; in fact, it’s not
only changed the game but changed the playing
field, changed the teams, and changed the rules.
We are now playing an exciting new game where
change and innovation are at the top of the
agenda. Consider Railsbank; it is just one player.
Yet we have expanded our product into credit and
data-driven insights and enabled any fungible
product, such as money, digital assets, kilowatt-
hours, gas units, carbon credits, reward points,
telco minutes, to be spent as money.
And to anyone that asks, we have always described
Railsbank as the plumbing that sits behind the
system, linking any company who wants to deliver
financial experiences (for example, FinTech,
brands, utilities, telcos) directly into the banking
system and allowing all the wonderful things to
happen. To continue that analogy, BaaS is one
great wide pipe that will allow the flow of all manner
of ideas and products to now be developed for an
ever-hungry consumer.
Yes, BaaS is hot right now, but it’s going to get
even hotter.
Expert Opinion
5
NIGEL VERDON
Co-founder and CEO

6. BANKING-AS-A-SERVICE 2.0
Expert Opinion
6
“Airports are a great analogy to well-managed BaaS platforms.
They are great marketplaces but are still gated. Only those
merchant partners who can comply with security and governance
requirements and show the promise of business sustainability
qualify to run their business there.”
Considering the investments you need to make in IT and operational
governance, how do you view the value of BaaS to a bank? Is it a
monetization opportunity or a customer acquisition & retention strategy?
The value is much bigger than the pure monetization of the commercial
arrangement. Several aspects are not necessarily quantifiable. Sure, we make
some fee-based revenues and float, but the learnings from our BaaS
partnerships around design, workflow, scale, and agility are the intangibles,
which have a higher value. We have been able to translate several of these new
learnings into better products, better business practices, and improved
operational processes. Through these partnerships, we have understood
customers better, discovered new customer segments, adopted product
innovation, and co-created products for them. Not all of them are true-blue
startups by definition but are enterprise platforms that address a niche B2B
requirement, e.g., payroll and HR-related enterprise solutions. And for these
very benefits, we do not have a problem with investing upfront in technology.
So, although for the purpose of supporting this model, we had to ‘API-fy’
several services for external consumption, the biggest consumers of these APIs
have been our own internal departments. Today, we see much higher usage of
these APIs internally for inter-departmental processes.
The numbers are 10X that of external consumption. This has, in turn, translated
into efficiencies in several aspects of IT architecture, integrations, and
operations.
Although activity in BaaS has grown in recent years, the FinTech industry
believes banks have been measured in their approach to onboarding
partners and exposing services publicly. Is this true, and if so, what are
the reasons?
This is true and for valid reasons. Ever since RBL Bank launched its early set of
APIs in 2014–2015, the significance of simplified access to capabilities that
form the fundamental rails of banking services has grown. The explosive
growth of payments enterprises, which in turn fueled the growth of other
industries such as e-commerce, retail, mobility, and food delivery services, are
testimony to this. At the same time, the period until now has also been a
learning curve for all participants in the ecosystem. Plenty of business models
have undergone churn, and many have failed to survive, e.g., wallets. As a bank,
we are still accountable and liable for compliance and are ultimately the
custodians of the customer, regardless of the partners they come through. We
would want the partners we engage with (and we engage with many non-
FinTech partners too now) to have a viable business proposition. The partner’s
financials and business health are as important to our governance as their
investors. All partners are not of the same maturity when it comes to processes
and data security, but we have been able to set these hygiene standards over a
period of time. Therefore, barring the most commoditized elements such as
payments (which was the earliest to come into the market as APIs and have
matured now), most other instances need to be put through the deliberation
and governance standards that we have set for ourselves.
RAJEEV AHUJA
Executive Director

7. BANKING-AS-A-SERVICE 2.0
Global Heat Map of BaaS Activity
7
HIGH
LOW
Companies Featured in this Report

8. BANKING-AS-A-SERVICE 2.0
Global BaaS Landscape
8
AMERICAS
EUROPE
ASIA
AFRICA
This is not an exhaustive list.

9. BANKING-AS-A-SERVICE 2.0
Banking-as-a-Service — A FinTech Perspective
If someone doesn’t spend their workday talking about Banking-as-a-Service,
they could be forgiven for thinking that it’s something banks do. While that is
not entirely untrue, those who work in FinTech know that BaaS has as much to
do with ‘banking’ as hot dogs have to do with dogs!
In simple terms, BaaS is the democratization of products and services that
were hitherto considered the sole remit of banks. Most often, it is FinTechs
that have been leveling the playing field when it comes to access. Be it
domestic or cross-border payments, issuing or acquiring, collections or virtual
accounts, alternative lending, or discount broking, complex financial services
are now available over APIs for bespoke consumption. If you are an e-
commerce player that wants to capitalize on its wealth of consumer data to
foray into financial offerings, you don’t need to reinvent the wheel and build the
whole machinery from scratch. Right from licenses, technology, and risk
management to operations, BaaS can create a one-stop-solution. In fact, even
if you are a bank in one part of the world and want to create a foothold in
another, you could work through a FinTech. A traditional bank can create its
digital avatar in a matter of months using a BaaS stack.
The concept of BaaS isn’t brand new. One could argue that the API economy
made this a predictable outcome, but it is still interesting to see how the
treatment of BaaS is evolving. While regulations typically follow innovation, in
some cases, such as Open Banking, it seems to have preceded and even
seeded it. Sophisticated regulators worldwide, e.g., the FCA in the UK and
the MAS in Singapore, have created frameworks that make it possible for
FinTechs to be a credible player in the ecosystem. Many countries have
recently seen this gap completely traversed, and ‘digital banking regimes’ are a
testament to that. The number and the kind of applicants that these attract
further prove that banking is inching toward becoming a true technological
meritocracy. Thus, investor sentiment and the increasing appetite for
institutional FinTech are unsurprising.
To summarize, BaaS is perhaps the 3.0 version of the chain reaction set off
by the digitization of payments. For most businesses and use cases,
financial transactions are incidental, and the ‘as-a-Service’ approach ensures
that not everyone is spending their time and energy on the same thing.
Expert Opinion
9
PRAJIT NANU
Co-founder and CEO

10. BANKING-AS-A-SERVICE 2.0
Investments Activity
2019 can be considered a watershed year in the BaaS sector. Funding numbers rose 122% compared to the numbers in 2018. Marqeta’s $260 million Series E
funding round that year played a crucial role. In India, Razorpay and Zeta, among other firms, raised over $50 million in various rounds. Much of this funding will
likely go into the development of their neobanking and BaaS platforms. All these activities highlight Asia as a growing hotspot for BaaS. The trend of increasing
funding continued in 2020 as well. Investor interest in BaaS was alive even in the midst of the COVID pandemic.
281.2 623.7 579.9
H1
H2
Total
TECH
COMPANIES
BANKS/FIs VCs/PEs
(Mn, $)
This is not an exhaustive list
10
144.2
422.5
376.5
137.0
201.2 203.3
0
150
300
450
2018 2019 2020

11. BANKING-AS-A-SERVICE 2.0
Who will power five-minute banking?
If you can’t wait for more than five minutes for an Uber, which is a two-ton
mass of atoms, why would you wait for days for money, which is all bytes?
Money makes our world go round, and it is a daily-engagement consumer
product. Yet, there’s not a single financial brand in India which we truly love.
Money is like a river; banks have tried to construct a dam on it, divert it into their
private pond, and harvest it for profits. This is why it has so much friction, and it
frustrates us as customers. COVID-19 has unleashed a Cambrian explosion of
everything digital. Everything that can be converted from paper to bytes will get
digitized.
It's a fair bet that incumbent banks will take the longest to digitize completely
because they are designed to be compliance-first, branch-second, and
customer-last. Unsurprisingly, most of them have been slow to digitize as a
response to COVID-19, fervently hoping that things will go back to normal once
the pandemic is over. Meanwhile, 100 million retail customers have already
moved away from stores and branches to app-based shopping and
transactions. They won’t go back to the old offline economy after the pandemic
because digital convenience is addictive. This is an entire generation of middle-
class Indians for whom the retail economy now lives inside apps. For them, all
consumer interactions start and end on a screen or delivery. We believe that
frictionless convenience is the foundation on which the post-pandemic
economy will be built.
The Opportunity for FinTech Challengers
The good news for FinTech challengers is that in the near term, the market
capitalization of banks in India has no co-relation with the quality of digital
experience offered by them. In fact, the larger the bank market cap, the more
branch-driven its customer experience. Hence, it’s unlikely that any of the
larger banks is going to immediately change course and embrace digital in a
meaningful way. Therein lies the opportunity for pure digital challengers who
are quietly chipping away market share from incumbent banks with relatively
frictionless payments and lending-led offerings.
We believe that in the near term, digital NBFCs will not emerge as challengers
for incumbent banks, as the NPA crisis has muted the appetite of investors on
balance sheet plays. However, we fully expect consumer and SMB digital
payments to be dominated by startups, albeit riding on regulatory-controlled
APIs provided by banks. It has already happened in UPI payments, and we
expect this trend to play out in every aspect to digital payments as we go
forward. While the government has socialized the economics around UPI-
based payments, the real value lies in consumer relationships and payment
data. Moreover, other forms of domestic and international card-based
payments provide ample opportunities to FinTech challengers to launch
targeted offerings on the issuing and acquiring side of card networks.
Our estimate is that FinTech challengers in India will process $1 trillion in
digital transactions by 2025, powered by UPI and card networks. Based on
RBI’s most recent payments and settlement bulletin, UPI payments are already
at a $600-billion annualized run rate, while debit card payments are at a $120-
billion annual run rate with credit cards at a $80-billion run rate. UPI payments
have been growing at more than 100% per annum, while credit card payments
have been growing annually at around 30% since the past few years. It’s safe to
assume that India’s digital payments market will be moving to $1 trillion in 2021
and swell up to $3 trillion by 2025. What is interesting is that incumbent banks
have already lost the race for the consumer side of UPI payments to FinTech
challengers. Apps such as Google Pay, PhonePe, and Paytm are already
dominating UPI payments. Other FinTechs are building significant market
share in the acquiring and issuing side of the payments business. If we assume
a blended 30% market share for FinTechs across UPI and card payments, we
arrive at the $1-trillion market opportunity for FinTech brands and digital
infrastructure providers.
Expert Opinion
11
VIKRAM CHACHRA
Founding Partner

12. BANKING-AS-A-SERVICE 2.0
Expert Opinion
12
BaaS, or ‘Banking-as-a-Service,’ while eponymous to ‘Software-as-a-Service’
is a platform play that allows banks to partner with FinTechs and businesses to
develop, market test, and scale innovative financial product or service. BaaS
has layers riddled with complexities primarily around regulations and
governance; heightened requirements around KYC aimed at protecting banks
becoming a conduit for laundering money have added to the complexity.
MEDICI’s BaaS 2.0 report is opportune and gives a wide-angle perspective on
what the world is going through and how it is likely to evolve.
Historically, the banking business has been a store of trust; customers park
their life savings with an entity that would protect and provide interest on the
saving as a motivation for the monies parked. Over the past several decades,
brands of all kinds have tried to work with regulated entities to offer financial
products or services to their customers with an objective to build on this trust.
What has changed over the past decade or so is with the advent of mobility and
availability of inexpensive data, pretty much every good or service we consume
have made their way to the smartphone, implying the brands that we interact
most often with have the power to influence our choice for financial products.
At this intersection of mobility and commerce is where Banking-as-a-Service
will evolve.
For banks, lending their license to new-age technology companies or a brand
would mean that they are able to participate in the larger evolution of the
FinTech ecosystem. It also allows banks to move away and deploy their
monolithic mainframe systems for control functions around bookkeeping and
finance.
Typically, BaaS playbooks globally have evolved with maturing startup and
FinTech ecosystem, and in different markets, the evolution has been different,
partly due to regulation and partly due to the maturity of other elements of the
ecosystem. In India, as an example, the rollout of Aadhaar, an online verifiable
identify, paved the way for solving KYC-related challenges electronically.
Likewise, UPI has solved for the payments railroad, with its success; it is
targeted to hit a billion transactions a day in the next two to three years.
So, India’s BaaS playbook, albeit in its nascent stage, needn’t solve for
foundational challenges around KYC or payments. As a matter of fact, due to
the verifiable online identity as a public good and other elements getting built
around it, there is a greater emphasis on access to credit, banking, and other
financial products.
It is at this intersection that we find interesting BaaS offering taking off over the
next few years, and several banks, large and small, are waking up to the idea of
BaaS by opening up their systems and partnering with entities that can help
them achieve their objectives.
At YAP, we are singularly focused on helping companies ride the BaaS wave to
help ship out new FinTech products into the market faster, smarter, and safer.
MADHUSUDANAN R
Founder

13. BANKING-AS-A-SERVICE 2.0
Banking-as-a-Service — Evolution
What began as a simple idea of API-enabled
banking has now morphed into every company
picking up the scent and looking out for angles
where they can add banking and financial
integrations to their products. At this point,
Banking-as-a-Service is not just limited to
providing an existing banking service under your
white label or a third-party operator but has also
evolved to create a completely different experience
for your customers from scratch. This is where it
helps to go into a bit of detail on the backend and
understand the fundamental differences between
different kinds of API banking models, e.g., Open
Banking and platform banking. A good way to get
an analogous grasp on this is that Open Banking is
like the baby version and platform banking is like
the fully formed adult version. As you can imagine,
the baby version is the movement and handling of
banking data (Open Banking), and the adult version
is the creation of an entirely new business model as
a platform using banking APIs.
Let’s look at the tailwinds that enable this new
and unique phenomenon of ‘every company
becoming a FinTech company.’ Most of them
are visible in plain sight:
• Banks are in a state of healthy competition
when it comes to opening up APIs to acquire
new customers in the form of FinTechs,
startups, and corporates.
• Banks realize that they cannot serve all their
customers and need these partnerships in
place.
Here are a few new or hidden tailwinds:
• The cry for digitization has always been around,
but COVID-19 has just made it stronger to a
whole new level.
• With the number of banks increasing in the
form of challenger banks and neobanks, there
is a hidden theme of specialization, which is
emerging, further refining their business
strategies.
From our experience at Decentro, these tailwinds
have helped a lot in our growth and the overall
evolution of the ecosystem. Timing also helps, as if
we had started out around 5–7 years ago, the
major challenge would have been nearly no
presence of banks that provide APIs to partners!
Interestingly enough, the landscape has never
been more conducive at a global level as well, albeit
differently in different regions as expected. As with
any industry and domain, there are interesting
challenges that need to be overcome before hitting
the product-market fit.
Here are some key challenges in Banking-as-a-
Service:
• The percentage of banks with some presence
of APIs that they expose to partners
• Their understanding of the business models
• Successful examples in the ecosystem
• Presence of smart and adequate capital
• Enough demand from customers
• Support from the regulator
I think one of the best things about APAC,
especially India, is that we are in a good place in
terms of all the above, except a few hiccups here
and there.
Let's look at some data:
• At a global level, BigTech companies like Apple
and Amazon could grab up to 40% of the $1.35
trillion in US financial services revenue from
incumbent banks, according to a report by
Insider Intelligence.
• With 54% of respondents to a Bain study
indicating that they trust at least one tech
company more than their own bank, consumer
trust is making BigTech players a key
phenomenon in the finance industry.
• In India, **37%** of Indian respondents will
change banks if they had a bad experience.
**One in four** would share their bad
experience on social media, while **44%**
would let friends and family know about their
issues. Does that signal a major shift in
preferences? Definitely, it does.
• I have always shared that the Unified Payments
Interface (UPI) has been like a key inflection
point of the API banking ecosystem in India.
UPI’s pace has been like a rocket ship — it
recorded 1.25 billion transactions in March
2020, valued at INR 2.06 lakh crore ($29.22
billion).
Expert Opinion
13
ROHIT TANEJA
Founder and CEO

14. BANKING-AS-A-SERVICE 2.0
Top Banks Globally in BaaS
14
AMERICAS
This is not an exhaustive list
EUROPE AFRICA ASIA
A large number of banks have their API stores and developer hubs running today. Banks in markets
with regulated open banking are mandated to have API stores. Banks represented above have
progressively shown to assign strategic importance to BaaS and partner-led growth beyond
compliance and basic services such as account information, payments and public APIs.
However, the above representation is not exhaustive.

15. BANKING-AS-A-SERVICE 2.0
Expert Opinion
15
BaaS and the Invisible Bank
In a digital-first world, banking and the way financial
services are delivered is undergoing a massive
transition. Banking services are today getting
increasingly consumed outside of traditional bank
boundaries. The unbundling of financial services, along
with the growing popularity of apps that often
transcend functional boundaries, has given rise to this
phenomenon. For the customer today, they have the
bank where they need it, in a form & flavor they like. In
simpler terms, you can access banking services from
third-party apps and platforms. Banking-as-a-Service
(BaaS) thus means de-linking various financial services
and making them available for external platforms to
consume. Smart banks are already at it and serving
their new-age customers, quite invisibly! Technically,
APIs make this possible, and most mainstream banks
today run a focused team around API Banking.
Applications
Basic applications of BaaS started with banks
providing Fund Transfer APIs and Collection APIs,
which help in automating pay-outs and collections in
native platforms, and thus not depending on bank
interfaces for the same. For example, your employer
while remitting salaries could do so seamlessly within
the company’s own payroll system. The banking
service to do fund transfer is made available as a
service in such platforms. In the absence of this, the
official would have to separately access the bank’s
internet banking portal to upload necessary payroll
data and re-do the approval functions there. Similarly,
processing a large number of invoice payments or
collections for businesses can be automated by way of
Virtual Accounts, whereby your existing Account
software or ERP is enabled to directly access bank
accounts and reconcile the books, the functions
hitherto done manually or using multiple systems.
Various product stacks brought out by NPCI and other
ecosystem players have achieved tremendous scale
and possibilities for innovation. The UPI story needs no
mention as it has impressed even the most advanced
tech companies and nations on the planet. Other
examples include BBPS for bill payments or NETC for
vehicle payments. In the case of the NETC stack, every
vehicle has virtually been mapped with an account
today. And any payments related to the vehicle—from
toll collection to payments towards insurance, fines,
workshop, parking, or fuel—can be efficiently managed
using this stack. Not long ago, all these were cash
payments- creating inefficiencies and its attendant
challenges. Beyond payments and collections, banks
‘open up’ to ride the neobanking wave where the entire
financial need-stacks of customers are satisfied—in
part or full, by new-age apps and platforms. The use
cases range from cards, deposits, PFM, investments,
payments, or a comprehensive suite of the financial
service value chain. We are witnessing an interesting
duel where lifestyle apps embed banking while
neobanks, on the other hand, tie the lifestyle needs of
the customer within their apps. Since payment is a
common element in any lifestyle journey, this duel fuels
innovation and will be an interesting space to watch out
for.
Why is it business-wise to embed financial
services in popular apps?
• It helps improve customers engagement and
create greater sustainable differentiation
• Financial services gels with lifestyle branding that
focus on the emotional experience of customers
• Generates new lines of financial value for
businesses
• It helps to position themselves as accessible and
symbiotic with consumers’ routines
Regulatory landscape and the future
The mobile & internet penetration, the comfort of
cloud, entry of FinTech players, robust & innovation-
friendly regulatory interventions, and a focus on
customer experience & security are factors shaping the
digital banking landscape across markets.
We are currently increasingly seeing FinTechs front-
ending for the Bank and providing superior CX and
sourcing strategies, often with enticing cashbacks,
backed by deep VC funding. Clearly, regulatory
guidelines and a strong governance framework are
crucial as new business models evolve. The TPAP
model, under the NPCI–UPI framework, presents a
reference framework. While the UPI model is restricted
to payments, a similar framework for neobanks will
help bring innovation and investments in this space.
Banking is one of the most highly regulated sectors in
any market, and naturally so, as it has wider
implications on sustaining the economy. Thus, it is no
surprise that only a few qualified for a universal
banking license in the Indian market in the last two
decades. Even with a supposedly conservative manner
in which banks are governed and regulated today, we
see banks failing and frauds increasing. To support this
with numbers, a recent RTI filing revealed that around
85,000 cases of bank fraud involving INR 1.85 trillion
were reported just for the previous FY alone. While the
form and flavor of banking are undergoing a
fundamental shift, the foundations of governance
controls, risk assessment, data security, and privacy
policies require a considerable overhaul. The
regulatory environment, while being innovation-
friendly, should also keep pace with the rapid shifts in
the digital economy and not play catch-up. This would
pave the way for sustainable business models and
rewarding customer experiences.
VIVEK GOPALAKRISHNAN
Head of Open Banking
WHERE DO YOU BANK?
The transition over decades
Bank
Counters
ATMs
& POS
Internet Banking
& Mobile Banking
Anywhere, Anytime!
Where you shop, order food, chat or hangout.

16. BANKING-AS-A-SERVICE 2.0
Expert Opinion
16
Industry viewpoint on “Banking-as-a-
Service”
The term “Banking-as-a-Services” (BaaS) squarely borrows
the concept from PaaS, IaaS, and SaaS services of the cloud
computing world. Cloud computing enables organizations to
leverage infrastructure, platforms, or software as services,
thereby reducing the total cost of ownership and ease of
scaling by leveraging software solutions in a multi-tenant
environment. It enables companies to focus on core business
activity and helps reduce time, effort, and resources spent on
IT.
Similarly, BaaS is about creating financial services and
products as a technology platform that enables other
organizations (non-banking and other industries) to integrate
and leverage the banking platform for financial transactions
and services, thereby creating innovative financial solutions,
reducing the time to market and customer acquisition, and
creating a financial ecosystem.
Banks and financial institutes continue to play a pivotal role in
building the digital landscape for financial inclusion and
providing a multitude of core and innovative banking services.
The overall financial ecosystem is further undergoing
evolution. Efforts towards financial inclusion, innovation in
payments, customer experience, and regulatory norms have
changed the banking landscape. Not only the key banks but
FinTech organizations too are evolving the space of
payments, lending, cash management, credit, enterprise
finance management, and other areas, creating unique
banking services and offerings, innovating customer
experience, and redefining customer outreach, thereby
creating an opportunity for collaboration.
BaaS gives banking and technology a unique space to define
financial products and services as technology-enabled
offerings, wherein financial services and products define the
construct, while API technology provides the implementation
and execution framework.
Banking-as-a-Service is a unique opportunity for the banking
industry, leveraging the deep financial knowledge, products,
operations, and human resources to take a giant step towards
redefining the banking and financial ecosystem. Let’s explore
a few reasons on how the BaaS approach can be leveraged:
• Expanding footprints: BaaS provides a unique win-win
opportunity for banks and the ecosystem. The integrated
banking platform enables the ecosystem to leverage the
processes, operations, and integrates it with the core
banking systems. On the other hand, this provides an
opportunity for banks to leverage the ecosystem for the
last mile outreach like new customer acquisition and
opportunity to upsell/cross-sell products, etc. ICICI
Bank’s partnership with FinTechs in the liability space is a
quintessential example of creating a win-win
collaboration that enables the FinTechs to leverage ICICI
Bank’s APIs to reinvent customer journey while creating
an avenue for the bank.
• Ease for customers: Customers are adopting digital
solutions for doorstep convenience. This customer
behavior has impacted and evolved digital adoption
across industries. BaaS is the last-mile culmination of
this digital evolution, whether in payments, credit,
lending, savings, or investing. ICICI Bank’s partnership
with Amazon for ‘Amazon Pay ICICI Bank Credit Card,’
digital auto loan partners for auto lending, Google Pay,
etc., are some of the partnerships to enable customers to
access and meet their financial needs easily.
Furthermore, ICICI Bank created ‘ICICI Stack,’ a
comprehensive digital banking service, and APIs to
enable the ecosystem of retail and businesses, including
retailers, merchants, FinTechs, large e-commerce firms,
and corporates. ICICI Stack offers nearly 500 services
enabling a multitude of banking services and products.
The platform creates a digital infrastructure to facilitate
retail customers as well as merchants, retailers,
professionals, FinTechs, startups, e-commerce players,
and corporates across the country.
• Innovation: As the financial ecosystem evolves to meet
the growing requirements for ease of banking, innovative
customer journeys, millennial customers, the API-driven
BaaS approach helps the incumbents be at the heart of
these innovations and partner with the ecosystem for
faster GTM (go-to-market). ICICI Bank is collaborating
with partners to redefine business banking for small and
medium enterprises, freelancers, and startups. The
platforms offer a seamless banking experience for ICICI
Bank’s Current Account holders for invoicing, banking
services, and automated bookkeeping. The partnership
leverages the Connected Banking BaaS platform to link
their ICICI Bank Current Account with the open platform
and manage banking, invoicing, accounting, and
payments.
• Industry ecosystems: API offerings of the bank through
the BaaS approach enables banks to be part of the
industry ecosystem. ICICI Bank digitized commercial
banking through its affiliated Arteria’s FinessArt platform,
enabling the suppliers and distributors to avail financing
through a completely automated and paperless process.
Organizations can leverage the platform to bring together
the industry ecosystem of distributors and suppliers and
provide lending services, thereby closely integrating
banking and the supply chain.
• Regulatory compliance: Open Banking Standard and
Payment Services Directive (PSD2) across Europe, the
UK, and other parts of the world have been evolving.
Certain countries have taken a regulatory approach, while
other countries have defined a framework for banks to
share and leverage customer information (post customer
consent). Unified Payment Interface (UPI) revolutionized
the payment space in India, which was the first step
towards open banking. Account aggregator (AA) licenses
given to NBFCs is the next step towards Open Banking.
API enabled BaaS platforms to enable a robust
architectural approach to aggregate with AAs and
enables the FIP (financial information provider) and FIU
(financial information user) roles.
API technology is the fuel that fires BaaS, and though the API
technology has been around for a long time and has enabled
the entire ecosystem with ease of integration, high availability,
common protocols for a multitude of technological
integrations agnostic to the technologies being used by
organizations internally. ICICI Bank appreciates the API
approach towards a robust open banking and BaaS
approach. The ‘ICICI Bank API Banking portal,’ which consists
of 250 APIs, enables businesses, FinTechs, corporates, and
e-commerce startups across the globe to seamlessly sign up
on it, create an application, select the application, test it out
and get the sample code. ‘ICICI Bank API Banking Portal’
aims at simplifying the process of digital collaboration for a
partner company with the bank and reduces the time taken to
develop business solutions.
DR. SHWETA DARBHA
Technology Head of Digital
Platform and API Banking

17. BANKING-AS-A-SERVICE 2.0
What’s Inside Banking-as-a-Service 2.0
17
1. Preface
2. Overview of Banking-as-a-Service
3. Funding and Investor Activity
4. Market Activity
- Global Landscape
- Partnerships
- M&A
5. Snapshots — Key Players
6. BaaS By Banks
7. Embedded Finance
8. Outlook

18. BANKING-AS-A-SERVICE 2.0
18
Sources
Invisible FinTech — Open Banking & APIs
Madhusudanan R
Founder
Nikhil Kumar
Co-founder
Prajit Nanu
CEO &
Co-founder
Dr. Jorg Howein
Chief Product
Officer
Mikhil Innani
Managing
Director
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