Member Exclusive

Tearsheet Research: What financial professionals think about Banking as a Service

  • Banking as a Service is a growing industry and the industry recognizes it.
  • We polled financial professionals about their views of BaaS.
close

Email a Friend

Tearsheet Research: What financial professionals think about Banking as a Service

As providers in the space continue growing their customer lists and raising capital, Tearsheet is continuing our exploration of Banking as a Service.

We recently asked 154 financial professionals across traditional FIs to fintechs, from product to marketing to general management, about what they think about Banking as a Service, how it relates to their businesses, and which providers they hold in high regard.

(If you’re interested in participating in future research, you can apply to join our Outlier Survey Panel by applying here)

While parents and their kids likely don’t discuss Banking as a Service ’round the dinner table, financial professionals do seem to know what BaaS is. 87.9 percent are familiar with BaaS while the remainder either haven’t heard of it or aren’t familiar with the subject matter.

We were also interested to understand what financial professionals think about BaaS over time. We wanted to see if they believe BaaS was growing in importance over time. And it is — according to the professionals we surveyed, nearly 97 percent think BaaS is becoming increasingly impactful. No one thought it was becoming less important, while the remainder think it’s just as important now as it was a few years ago.

There are a growing number of players in the BaaS industry. Some are pureplay tech companies that have built their platforms from the ground up. Others were built as banks and have turned their technology inside out to help other tech companies with banking technology.

Green Dot, as one of the oldest BaaS players enabling users to bank with brands they love, is seen by respondents as the strongest offering, ranked by 23.3 percent of respondents. Others ranking highly are Cambr (16.7%), Cross River (10%), Synapse (10%), BBVA (6.7%) and Marqeta (6.7%).

Next up, we asked our panel whether their firm was considering using a BaaS provider over the next 24 months. Over 30% of respondents said yes — they are considering working with a BaaS platform. Almost an equal number said they weren’t planning on it. A similar sized group said that they might work with a BaaS provider or that they didn’t know if they would or not.

Over 50% of respondents said that they aren’t creating their own BaaS in the short term. Almost 10 percent said that their firm is working on its own BaaS offering in the next 2 years. The rest either don’t know or said they might work on BaaS in the future, but that they weren’t certain.

In addition to our questions, we gave respondents a free pen to describe what they think are the BaaS industry’s greatest strengths right now. Many described how quickly BaaS firms can get banking products to market. Respondents also appreciated how BaaS firms handle licensing and compliance issues across state borders.

We ended our survey questions with an opportunity to provide constructive criticism. From most perspectives, BaaS is a young industry. While it’s maturing, it is also experiencing some growing pains. Respondents say that they would appreciate more transparency on pricing and the nature of their relationships of all the players in a BaaS ecosystem.

People are also concerned about the commoditization of BaaS products. If there are just a handful of providers, new banking apps run the risk of all looking alike, their differentiations bleed into the scale and product sets of the BaaS providers behind them.

0 comments on “Tearsheet Research: What financial professionals think about Banking as a Service”

Deep Dive, Member Exclusive

Deep Dive: Square

  • Square is one of the seminal financial services companies of this generation.
  • Here's a deep dive into Square's products, business, and company.
Rimal Farrukh | January 15, 2021
Data Snacks, Member Exclusive

Challenger banks shift from growth mode to focus on profitability

  • Challenger banks around the world have sprouted up like mushrooms after the rain.
  • As they mature, neobanks go through a lifecycle where they shift from growth at all costs to focus on profitability.
Zachary Miller | January 14, 2021
Member Exclusive, Payments

Contactless pay is here to stay: What about QR codes?

  • The use of QR codes is slowly growing in the US.
  • Their increased popularity may stick around even after the pandemic.
Rivka Abramson | January 11, 2021
Data Snacks, Member Exclusive

2020 was the year of the mega-deal for fintech VC

  • 2020 saw a record number of firms raise investment rounds over $100 million.
  • Firms like Chime, AvidXchange, Klarna, and Robinhood demonstrated investor appetite for mature fintech companies.
Zoe Murphy | January 08, 2021
Member Exclusive

Affirm is going public: Here’s a peek at some of the people behind the payment firm’s success

  • Buy now, pay later leader Affirm is going public soon.
  • Here's a look into the senior product and marketing people behind the firm's growth.
Rivka Abramson | January 07, 2021
More Articles