What Is Banking as a Service (BaaS)? A Founder's Guide (2026)

Most fintech founders encounter the same realisation at some point during product scoping: offering payment accounts, issuing cards, or holding user funds requires a banking licence — and obtaining one takes 12–24 months and costs €500,000+. Building a fintech SaaS product without understanding this landscape first leads to expensive architectural rework.

Banking as a Service exists to solve this problem. Here is what it is, how it works, and when you need it.

The Short Answer

Banking as a Service (BaaS) is a model where a licensed bank or e-money institution provides its financial infrastructure — accounts, cards, payments, compliance — via APIs to non-bank companies. Instead of obtaining your own licence, you build on top of a BaaS provider’s licence and infrastructure. You own the product experience and the customer relationship; the BaaS provider handles the regulated infrastructure underneath.

Why BaaS Exists

Financial regulation requires a licence to: hold customer funds, issue payment accounts (IBANs), issue payment cards, initiate payments on behalf of users, and operate as an e-money institution.

Obtaining an EMI (Electronic Money Institution) licence in the EU takes 12–18 months, costs €200,000–€500,000 in legal and compliance fees, requires a minimum capital requirement (typically €350,000), and demands ongoing compliance infrastructure that adds €100,000–€300,000/year in operational cost.

For most fintech startups, this is not the right investment at the early stage. BaaS provides access to the same regulated infrastructure as a service — at a fraction of the cost and time.

How BaaS Works

A BaaS provider sits between the regulated banking infrastructure and your product:

Your Product (UI, UX, Business Logic)
        ↓ API calls
BaaS Provider (Accounts, Cards, Payments, Compliance)
        ↓ Regulated infrastructure
Banking Licence / Central Bank Settlement

Your product calls the BaaS provider’s APIs to: create a payment account for a user, issue a virtual or physical card, initiate a SEPA transfer, check a balance, receive webhook notifications for transactions.

The BaaS provider handles: regulatory compliance, KYC/AML checks, transaction monitoring, card scheme membership (Visa/Mastercard), SEPA connectivity, and central bank settlement.

What BaaS Enables vs What It Does Not

BaaS enables:

• Issuing IBANs or sort codes / account numbers to your users
• Virtual and physical Visa/Mastercard card issuance
• Holding e-money balances on behalf of users
• SEPA credit transfers and direct debits
• Faster Payments (UK)
• Transaction webhooks and account data access
• Spend controls and card programme management

BaaS does not replace:

• Your product’s UI and user experience (you build this)
• Your business logic and product differentiation (you build this)
• A payment gateway for card acceptance (use Stripe or Adyen)
• Open Banking data access (use TrueLayer or Nordigen)
• Your own KYC flow UI (you build the UX; BaaS provides the verification service)

Leading BaaS Providers in Europe (2026)

Provider	Licence	Strengths	Best For
Modulr	UK FCA EMI + EU	Payroll, B2B payments, strong UK coverage	UK-focused B2B fintech
Swan	French ACPR EMI	Excellent developer experience, embedded finance	European consumer and B2B products
Solaris	German BaFin Banking Licence	Full banking products, strong German market	Consumer banking products, DACH market
Railsr	UK FCA EMI	Broad product range, global coverage	Multi-market fintech
Stripe Treasury	Multiple (via partners)	Seamless Stripe integration	Companies already using Stripe
Adyen for Platforms	Dutch DNB Banking	Enterprise-grade, strong compliance	Scale-ups and enterprise
Treezor (Société Générale)	French Banking	Established European bank backing	French market, risk-averse buyers

BaaS vs Open Banking — When to Use Each

This is one of the most common points of confusion for fintech founders:

Capability	Open Banking (PSD2)	BaaS
Read bank account data	✓	✓
Initiate payments from existing accounts	✓	✓
Create new payment accounts / IBANs	✗	✓
Issue payment cards	✗	✓
Hold user funds (e-money)	✗	✓
Required licence	AISP / PISP registration	Operates under BaaS provider’s licence
Time to integrate	4–8 weeks	8–16 weeks
Cost	€0–€500/month	€500–€5,000+/month

Use Open Banking when your product needs to read account data or initiate payments from existing bank accounts. Use BaaS when your product needs to create new financial accounts, issue cards, or hold funds. For UK-based products, the FCA regulation guide for fintech startups clarifies which regulatory regime applies to each approach.

Many fintech products use both: Open Banking to aggregate and read existing account data, BaaS to issue new accounts and cards.

BaaS Cost Structure

BaaS pricing is more complex than most SaaS pricing. Expect:

Setup costs:

• Technical integration: €5,000–€50,000 (typically done by your development team or agency)
• Compliance onboarding: €2,000–€15,000 (due diligence, legal review)
• Programme setup: €5,000–€25,000 (card programme setup, product configuration)

Ongoing costs:

• Monthly platform fee: €500–€5,000/month
• Per active account: €0.50–€5.00/account/month
• SEPA transactions: €0.10–€0.50 per transaction
• Card transactions: 0.1–0.3% + €0.05–€0.10 per transaction
• Card issuance: €2–€10 per physical card, €0.50–€2 per virtual card

At 1,000 active accounts with moderate transaction volume: estimate €3,000–€8,000/month in BaaS fees.

When to Get Your Own Licence

Operating under a BaaS provider’s licence is the right approach at the early stage. Consider obtaining your own licence when — for UK products, the FCA authorisation process sets out the full requirements and timelines:

• Your BaaS fees exceed €100,000/year and the economics of your own licence make sense
• Your BaaS provider’s product limitations are constraining your roadmap
• Enterprise clients require direct regulatory relationships rather than a white-label arrangement
• You need greater control over compliance processes for specific markets

The timeline for an EMI licence in the EU is 12–18 months. Most fintech companies reach Series B or significant ARR before this investment is justified.

Integration Timeline

Integrating a BaaS provider into a fintech SaaS product typically takes:

Phase	Duration
Provider selection and commercial negotiation	4–8 weeks
Technical integration (API, webhooks, KYC flow)	6–10 weeks
Compliance onboarding and due diligence	4–8 weeks (runs in parallel)
Testing in sandbox environment	2–4 weeks
Production launch	1–2 weeks
Total	12–20 weeks

This is why fintech MVPs take 16–24 weeks rather than the 10–16 weeks of a standard SaaS MVP — a gap that custom SaaS MVP development engagements should account for in scoping.

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Zulbera builds fintech SaaS products and BaaS integrations for European founders — from API integration through KYC flow design and compliance architecture. If you are building a financial product and want to understand which BaaS provider fits your use case, request a private consultation.

Related Reading

• Fintech SaaS Development — full guide to building compliant financial platforms
• Custom SaaS Development for Fintech, HealthTech, and B2B Platforms — how regulated verticals differ architecturally
• AI Platform Development: Timeline and Cost Breakdown — cost context for fintech AI products
• Custom SaaS Development Cost in 2026 — how BaaS integration affects total build cost
• How Long Does It Take to Build a SaaS Platform? — why fintech timelines are longer