Banking-as-a-Service (BaaS)
Banking-as-a-Service is an arrangement in which a licensed bank makes its accounts, payments and cards available to a non-bank company, which builds the customer-facing product. The bank keeps the charter, the insured deposits and the regulatory responsibility.
Also called: banking as a service
A BaaS programme has three roles, worth naming separately because they are frequently collapsed. The bank holds the charter, holds the deposits and answers to its regulators for everything done under its permissions. A middleware or platform provider may sit in between, supplying APIs, ledgering and compliance tooling. The fintech owns the brand, the customer relationship and the product. Many programmes have only the bank and the fintech; the regulatory position does not change either way.
Supervisory attention has been intense. The US banking agencies issued final interagency guidance on third-party relationships in June 2023, expressly covering relationships with fintech companies, and followed it in 2024 with a joint statement addressing deposit-insurance misrepresentation and pass-through coverage. In 2026 the agencies proposed replacing the 2023 guidance with a revised version, so this is a live area rather than a settled one.
The lesson programmes have learned expensively is that the bank’s obligations cannot be outsourced — where a programme’s records were kept by an intermediary and did not reconcile, it was the depositors and the bank that carried it.
In practice
There is no single BaaS regulatory structure, and statements beginning "in BaaS, the bank does X" are usually wrong somewhere. Who holds the account of record, who is the ledger of record, whether pass-through deposit insurance is actually available, and who performs KYC differ from programme to programme and have to be read out of the contracts.
Example
A consumer opens what looks like a fintech account. The deposit sits at a chartered bank, the ledger showing who owns which part of the balance is kept by a middleware provider, and the app is the fintech's.
Commonly confused with
| Term | How it differs |
|---|---|
| Embedded Finance | Embedded finance is the outcome — financial products appearing inside a non-financial experience. BaaS is one of the supply arrangements that makes it possible. |
| Bank Charter | The charter is what makes an institution a bank. A BaaS programme rents access to one; it never creates one. |
| Sponsor Bank | Sponsor bank names the role the bank plays in the arrangement. BaaS names the arrangement itself, and is usually the broader commercial framing. |
See also
- Sponsor BankA sponsor bank is a regulated bank that lets a non-bank reach accounts, payment rails or card networks under the bank’s own charter and permissions. The program runs on the bank’s authority, and the bank stays answerable for what happens on it.
- Bank CharterA bank charter is the authorisation that makes an institution a bank — granted in the United States either by a state banking department or by the federal Office of the Comptroller of the Currency. Deposit insurance and access to Federal Reserve services are separate approvals, not things the charter brings with it.
- Embedded FinanceEmbedded finance is the delivery of a financial product inside a non-financial company's own product — a loan at a checkout, an account inside an accounting package, insurance inside a booking flow. The customer sees one brand; a regulated firm is still somewhere behind it.
- White LabelWhite label means offering another provider’s product or service under your own brand. The arrangement is about branding and delivery — it does not by itself bring that provider’s license, banking access or regulatory responsibility with it. What a deal covers is whatever its contract says.
- License SponsorshipLicense sponsorship is an arrangement under which one business conducts regulated activity using a license held by another, instead of obtaining its own. In US money transmission it is normally implemented by appointing the sponsored business as an authorized delegate.
- FBO AccountAn FBO account is a bank account held in one company’s name for the benefit of its underlying customers. The company controls the account; the money inside belongs to the customers. The bank’s relationship is with the account holder, not with them.
Go deeper
Regulatory information checked: 23/Sep/2026