By Ion Fratiloiu (pictured) , Head of Commercial, Yobota   

The financial services (FS) industry has gone through countless transformations in recent memory – the transition to digital, the rise of mobile banking and now the advent of embedded finance. Today’s consumers are not just tech-savvy – they have come to expect nothing but the best from their preferred banks and brands, who must keep pace with the breakneck speed of innovation that is rippling throughout the industry.  

Today, the onus to offer best-in-class FS products does not lie exclusively with FS businesses. Non-financial sectors like eCommerce are under pressure to integrate services like personalised cards and accounts and popular new products like Buy Now, Pay Later into their own platforms. By nature of their inherent technical complexity and the variable levels of regulation that surround them, offering such products is no mean feat for non-financial businesses.

The road to embedded finance

Historically, the majority of non-financial businesses have relied on the third-party solutions of legacy banks and regulated financial service institutions to deliver financial products to their platforms. Although there are some exceptions to this rule (Klarna is only partially regulated in the U.K., for example), this reliance on traditional institutions could be prohibitive in terms of cost and time to market, loss of platform integrity and inconvenience to the end-user. 

Increasingly, the solution that eCommerce and physical retail companies alike have been turning to is Banking-as-a-Service (BaaS) – a model that makes offering bespoke, best-in-class financial solutions a possibility for any company, no matter their scope, sector or size. 

In fact, according to a recent survey commissioned by Yobota, which surveyed 251 industry leaders in the banking and financial services space, 72% of businesses have worked with technology vendors to launch their own products or services in the past 12 months alone. Even more (79%) said that their business has encountered increased demand from customers for more personalised financial services.

BaaS is currently making big strides within the FS space to disrupt and democratise the sector. But how does it work? 

What does BaaS do?

In the simplest possible terms, BaaS is a service provided by companies with the technology, experience and infrastructure necessary to deliver versatile, reliable financial solutions to other businesses as a product. In theory, any business or

institution can take advantage of BaaS, from small non-financial startups to banks themselves. 

Take, for example, an eCommerce company looking to introduce a credit product of its own – their first step would be selecting a BaaS partner that offers the regulatory permissions of a regulated bank, and ideally, the balance sheet to match. The partner would then provide a package of the necessary banking infrastructure, out of the box or customised to their exact needs, and compatible with their own ecosystem or platform. Finally, the eCommerce company can use the banking license and regulatory permissions of a legacy or challenger bank in order to compliantly operate their product. 

At the crux of Banking-as-a-Service and its underlying technology are Application Programming Interfaces (APIs), developed by core banking and BaaS providers to act as a conduit between the source bank and the target platform, ensuring that end-users receive the same quality of experience, no matter what platform they are engaging with. This is the essence of the ‘white-label’ solution – it integrates so seamlessly into the target platform that it appears an integral part of it, needing no external branding or link to a third-party. 

The technological capabilities of some modern BaaS providers are so advanced that even established banks are taking advantage, using its modular infrastructure to update and improve their own offering. At its core, though, the greatest benefit lies with the end-user, who (thanks to BaaS) has access to a greater variety of customised, white-labelled embedded financial products at every checkout, resulting in a frictionless customer experience. 

BaaS is best

Yobota’s research found that 83% of those surveyed were confident in their ability to meet the evolving needs of their customer base. Given the prevalence of embedded finance and reliance on technology vendors among respondents, this suggests that BaaS has become instrumental to the continuing success of the FS space. 

Because the host of agile new startups in the market are judged on the strength of their ideas as much as their offering, a keystone of the fintech sector is innovation. BaaS removes the stumbling block that was previously posed by legacy banking infrastructure, allowing these new competitors to bring products to market faster than ever before. Removing barriers to entry will only catalyse competition within the sector further, as fintechs will have to be creative to stand out and carve out their own space. 

The value to a business of having its own personalised, white-labelled embedded financial solution is not just the revenue that such products can generate. It is the superior experience that they can now offer their customers, the meeting of rising expectations, and the loyalty that comes with it. Banking-as-a-Service is adding value to businesses of all shapes and sizes, and the ultimate beneficiaries of that value are the end-users themselves. 


From launching his financial career at Deutsche Bank, Ion spent a number of years consulting in the equity capital markets space and leading sales growth for FTSE500 company Fiserv and core banking provider Thought Machine. He joined Yobota in 2021 to launch its commercial operation, leading GTM strategy and building a diverse and multi-faceted team to take the company to the next stage of growth.