What Is Banking as a Service (BaaS)? A Founder's Guide (2026)
What is Banking as a Service (BaaS)? The founder's guide to operating a fintech product without an EMI licence: providers, costs, and timelines.
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 SettlementYour 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.
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
What is Banking as a Service (BaaS)?
Banking as a Service (BaaS) is a model where a licensed financial institution provides its banking infrastructure (payment accounts, card issuing, money transfers, compliance) via APIs to non-bank companies. This allows fintech startups and software companies to offer financial products (bank accounts, prepaid cards, payment initiation) without obtaining their own banking licence. BaaS providers include Modulr, Railsr, Swan, Solaris, and Stripe Treasury.
Do I need a BaaS provider for my fintech product?
You need a BaaS provider if your product: issues payment accounts or IBANs to users, issues physical or virtual payment cards, holds user funds (e-money), initiates payments on behalf of users, or requires an EMI or banking licence to operate legally. You do not need BaaS if your product only displays financial data (use an Open Banking aggregator instead), processes payments via standard payment gateways (use Stripe or Adyen), or does not hold or move user funds.
What is the difference between BaaS and Open Banking?
Open Banking (PSD2) allows third-party applications to read bank account data and initiate payments from existing bank accounts with user consent. BaaS goes further: it allows companies to create new financial accounts, issue cards, and hold funds, essentially operating banking services under a licensed provider's regulatory umbrella. Open Banking accesses existing bank accounts; BaaS creates new financial infrastructure.
How much does a BaaS provider cost?
BaaS providers typically charge a combination of: monthly platform fee (€500–€5,000/month depending on volume and features), per-account fee (€0.50–€5 per account per month), transaction fees (0.1–0.5% per transaction or €0.10–€0.50 per transaction), card issuance fees (€2–€10 per physical card), and setup/integration fees (€5,000–€50,000 one-time). Total costs vary significantly by provider and volume. Most BaaS providers require a minimum commitment period of 12–24 months.
What are the best BaaS providers in Europe in 2026?
The leading BaaS providers for European fintech startups are: Modulr (UK-regulated, strong for payroll and B2B payments), Swan (French EMI, strong developer experience, good for embedded finance), Solaris (German banking licence, strong for consumer products), Railsr (global coverage, broad product range), and Stripe Treasury (best for companies already using Stripe). The right choice depends on your target market, required financial products, and preferred jurisdiction.
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