As Europe goes digital, demand for banking as a service platform is poised to grow at 15.0% CAGR during the next decade. More and more Europeans are using smartphones and online platforms for everyday tasks, creating demand for financial services that are seamlessly integrated into their digital lives.
Future Market Insights, its latest report estimates the Europe banking as a service industry size to grow from US$ 8,913.30 million in 2024 to US$ 36,097.05 million by 2034. The target industry recorded a Y-o-Y growth of 13.0% in 2023.
Traditional banks are evolving by using BaaS to reach new customers and provide innovative financial products. Similarly, non-banks across Europe are increasingly going wild about BaaS platforms as they allow them to offer financial products like loans, payments, and money management tools without obtaining a full banking license.
Forecast for BaaS Platform Industry in Europe
| Attributes | Key Insights |
|---|---|
| Base Value in 2023 | US$ 7,868.82 million |
| Sales Value in 2024 | US$ 8,913.30 million |
| Industry Revenue in 2034 | US$ 36,097.05 million |
| Value CAGR (2024 to 2034) | 15.0% |
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BaaS is gaining immense traction across regions like Europe, North America, and East Asia. This model allows digital banks and other third organizations to connect with banks’ systems directly through APIs so they can build banking offerings on top of the providers’ regulated infrastructure.
The banking as a service (BaaS) platform provides the software that ensures safe communication of data between the traditional bank and a business/ fintech company. As a result, more and more banks and non-bank organizations are using it.
With banking as a service platform, banks/financial services providers can focus on their core capabilities-delivering products, services, and experiences. This results in reduced development time and cost.
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From 2019 to 2023, the banking as a service platform industry in Europe experienced a CAGR of 12.4%, totaling a valuation of US$ 7,868.82 million in 2023. During this time, the increased shift toward digital banking solutions, propelled by consumer demand for change and the need for efficient and convenient financial services, boosted industry growth.
Changes in legislation such as PSD2 (Revised Payment Services Directive) encouraged innovation and competition. The industry also witnessed increased partnerships and collaborations between traditional banks and fintechs.
Looking ahead, the Europe banking-as-a-service platform industry is poised to rise at a CAGR of 15.0% from 2024 to 2034. Total revenue at the end of 2034 is anticipated to reach around US$ 36,097.05 million. The increasing emphasis on digital transformation in the economy is a key growth-shaping factor. BaaS platforms are poised to see widespread adoption across Europe amid high penetration of digitalization.
Surging demand for seamless and personalized banking experience and advances in technologies such as AI, blockchain, and real-time payment processing will boost the industry. Similarly, favorable government support is set to benefit the industry.
With technology continuing to evolve, BaaS platforms can play a key role in enabling financial institutions to adapt to changing customer demands and regulatory requirements. This will make them a crucial component of the financial services ecosystem in the coming decade.
The table below shows the future growth rates of the top countries in Europe. The United Kingdom and France are set to record high CAGRs of 17.9% and 17.2%, respectively, through 2034.
Growth Outlook by Key Countries
| Countries | Value CAGR |
|---|---|
| United Kingdom | 17.9% |
| France | 17.2% |
| Germany | 15.1% |
| Russia | 16.3% |
| Spain | 14.4% |
The United Kingdom is emerging as a hotbed for banking-as-a-service (BaaS) platforms. This is due to the rise of open banking and fintech partnerships. The strong presence of banking-as-a-service (BaaS) platform providers is also positively impacting industry growth in the country.
Digital banking ecosystems are beginning to flourish in the United Kingdom. Early legislation and adoption of open banking, and the subsequent rise of fintech disruptors, means the United Kingdom has had a head start in several areas of digital, at least when it comes to the Western world.
More incumbent banks and financial services companies in the United Kingdom have started to offer fintech products directly to consumers. This is resulting in high adoption of innovative financial technology in the nation.
As per the latest analysis, demand for banking as a service platform in the United Kingdom is projected to surge at a CAGR of 17.9% through 2034. Total valuation in the country is set to reach US$ 6,333.94 million by 2034.
Germany’s robust banking industry and rapid digitization are important factors propelling the growing demand for banking as a service (BaaS) platforms. As a result, a CAGR of 15.1% has been estimated for the Germany industry between 2024 and 2034.
Due to high economic growth and a technologically savvy population, German banks offer innovative financial services and digital technologies to enhance customer experience. This trend is creating synergies between traditional banks and fintechs, resulting in embedded banking services across sectors.
As businesses and consumers embrace digital banking solutions, the demand for BaaS platforms is growing, with a strong national financial foundation and digital transformation initiatives. Hence, Germany will continue to offer lucrative growth opportunities to BaaS providers.
The table below highlights growth projections of top segments in Europe banking as a service platform sector. Based on solution, the banking as a service platform segment is set to retain its dominance, accounting for a revenue share of 25.6% in 2024.
Based on enterprise size, the medium-sized enterprises segment is set to showcase a significant CAGR of 17.6% through 2034. By end-user, the banks category will dominate the industry, holding a share of 26.9% in 2024.
Growth Outlook by Solution
| Solution | Value CAGR |
|---|---|
| Banking as a Service Platform | 14.8% |
| Banking as a Service APIs | 16.0% |
| Services | 13.6% |
BaaS platforms have transformed the traditional banking sector by providing a flexible and agile infrastructure for financial institutions to build and offer digital banking services. These platforms are improving customer experiences, enabling rapid innovation, and enhancing operational efficiency.
By using BaaS, fintech organizations and banks can quickly introduce new products and services while also meeting the evolving demands of tech-savvy consumers. Further, BaaS platforms have paved the way for collaborations between established banks and emerging fintech startups, creating a dynamic ecosystem that encourages innovation and competition.
BaaS has not only become a vital component but also a dominant force in shaping the future of banking in Europe. Due to these reasons, banking as a service platform segment is estimated to account for a revenue share of 25.6% in 2024 and further grow at 14.8% CAGR through 2034.
Growth Outlook by Enterprise Size
| Enterprise Size | Value CAGR |
|---|---|
| Small Offices (1 to 9 employees) | 12.3% |
| Small Enterprises (10 to 99 employees) | 13.1% |
| Medium-sized Enterprise (100 to 499 employees) | 17.6% |
| Large Enterprises (500 to 999 employees) | 15.9% |
| Very Large Enterprises (1,000+ employees) | 14.5% |
Mid-sized organizations based in Europe are poised for significant growth in the banking-as-a-service (BaaS) platform industry. This is because these organizations are increasingly recognizing the strategic benefits of adopting BaaS solutions.
Small and medium-sized businesses, generally known for their agility and adaptability, are embracing digital tools and technology to compete on a larger scale. This is driving demand for BaaS platforms in these businesses.
The need for agility and innovation in the economy in applications, where medium-sized businesses seek to compete with large organizations by maintaining operational flexibility, is directing them toward BaaS. Scalability and cost savings are attractive to these organizations, enabling them to access banking services with minimal infrastructure investment.
As the European BaaS industry matures, centralized organizations can enhance customer experiences, streamline operations, and drive sustainable growth in the digital banking landscape. Medium-sized enterprises are well-positioned to take advantage of these platforms.
The rising digital literacy and growing integration of technology in the financial sector signal the surge of mobile and online banking usage, particularly in investment operations. As a result, medium banks are increasingly tapping into the benefits of digital platforms.
As per the latest report, the mid-sized enterprise segment is anticipated to progress at a CAGR of 17.6% over the forecast period. It will account for a value share of around 25.7% in 2034.
Growth Outlook by End-user
| End-user | Value CAGR |
|---|---|
| Banks | 15.0% |
| FinTech Corporations | 18.0% |
| Investment Firms | 14.1% |
| Enterprises | 15.5% |
| Other End Users | 9.0% |
Being traditional financial institutions, Banks possess a wealth of resources, experience, and infrastructure, making them well-positioned to adapt to the changing financial technology landscape. By embracing BaaS, they can seamlessly integrate digital services into their offerings, creating a competitive advantage.
Banks also have the trust of a significant customer base, and by using BaaS platforms, they can enhance their digital capabilities. These platforms also help them improve customer experiences and offer a broader range of services.
The regulatory requirements for banks are often more demanding, necessitating efficient and robust compliance solutions. BaaS solutions provide them with the technological infrastructure to meet these regulatory obligations.
The established reputation and the ability to collaborate with fintech startups further solidify banks' position in the BaaS sector. As a result, they remain the leading end users of BaaS platforms in Europe. Courtesy of this, the banks segment is set to hold a prominent industry share of 26.9% in 2024.
Key players are concentrating on providing tailored banking as a service platform solutions to meet the specific needs of their clients. This allows end users to have data infrastructure aligning perfectly with their needs, ensuring cost-effectiveness and efficiency.
Vendors differentiate themselves through superior connectivity and network capabilities. They form extensive peering agreements and connections with multiple ISPs to offer low-latency, high-speed connectivity, making them an attractive choice for businesses seeking robust and fast banking as a service platform solutions.
Companies are heavily investing in research and development to develop new banking-as-a-service platform solutions that offer improved efficiency, scalability, and security, and scalability. They also employ strategies like partnerships, collaborations, mergers, acquisitions, and alliances to stay ahead of the competition.
Recent Developments in Europe Banking as a Service Platform Industry:
The target industry is set to hit a value of US$ 8,913.30 million in 2024.
Demand in Europe is set to grow at 15.0% CAGR through 2034.
The Europe BaaS platform industry value is predicted to total US$ 36,097.05 million by 2034.
Banks held a dominant share of 26.5% in 2023.
Starling Bank, Bankable, Sopra Banking Software, and Treezor.
HSBC
BaaS is the provision of banking products & services via third-party developers or distributors.
1. Executive Summary
1.1. Europe Industry Outlook
1.2. Demand Side Trends
1.3. Supply Side Trends
1.4. Analysis and Recommendations
2. Industry Overview
2.1. Industry Coverage / Taxonomy
2.2. Industry Definition / Scope / Limitations
3. Key Industry Trends in Europe
3.1. Revenue Opportunities for Banks/Non-Banks
3.2. Revenue Opportunities for Technology Enablers
3.3. Insights on No. of Banks acting as Bank Partners
3.4. Insights on Fintech Firms Partnering with Banks
3.5. Embedded Banking Trends
3.6. Others trends
4. Banking-as-a-Service (BaaS) Pricing Models
4.1. Pricing Analysis, By BaaS Solution
4.2. Average Pricing Analysis Benchmark
5. VC Funding Outlook for Banking-as-a-Service Industry
5.1. Major Start-ups in BaaS Platform in the South Korea
5.2. Funding Rounds and Total Funding Raised
5.3. Major Investors
6. Major Deals in FinTech Industry in Europe
6.1. Major Deals in FinTech, 2021-2023
6.2. Deal Scenarios, Y-o-Y % Growth
6.2.1. Year 2021 (Q1-Q4 deal movements, % change)
6.2.2. Year 2022 (Q1-Q4 deal movements, % change)
6.2.3. Year 2023 (Q1-Q4-est. deal movements, % change)
7. Industry Background
7.1. Macro-Economic Factors
7.2. Forecast Factors - Relevance & Impact
7.3. Value Chain
7.4. COVID-19 Crisis - Impact Assessment
7.4.1. Current Statistics
7.4.2. Short-Mid-Long Term Outlook
7.4.3. Likely Rebound
7.5. Industry Dynamics
7.5.1. Drivers
7.5.2. Restraints
7.5.3. Opportunities
8. Industry Demand (in Value in US$ million) Analysis 2019 to 2023 and Forecast, 2024 to 2034
8.1. Historical Industry Value (US$ million) Analysis, 2019 to 2023
8.2. Current and Future Industry Value (US$ million) Projections, 2024 to 2034
8.2.1. Y-o-Y Growth Trend Analysis
8.2.2. Absolute $ Opportunity Analysis
9. Industry Analysis 2019 to 2023 and Forecast 2024 to 2034, by Solution
9.1. Introduction / Key Findings
9.2. Historical Industry Size (US$ million) Analysis By Solution, 2019 to 2023
9.3. Current and Future Industry Size (US$ million) Analysis and Forecast By Solution, 2024 to 2034
9.3.1. Banking as a Service Platform
9.3.2. Banking as a Service APIs
9.3.3. Services
9.3.3.1. Payment Processing Services
9.3.3.2. Digital Banking Services
9.3.3.3. KYC Services
9.3.3.4. Customer Support Services
9.3.3.5. Others
9.4. Industry Attractiveness Analysis By Solution
10. Industry Analysis 2019 to 2023 and Forecast 2024 to 2034, by Enterprise Size
10.1. Introduction / Key Findings
10.2. Historical Industry Size (US$ million) Analysis By Enterprise Size, 2019 to 2023
10.3. Current and Future Industry Size (US$ million) Analysis and Forecast By Enterprise Size, 2024 to 2034
10.3.1. Small Offices (1 to 9 employees)
10.3.2. Small Enterprises (10 to 99 employees)
10.3.3. Medium-sized Enterprise (100 to 499 employees)
10.3.4. Large Enterprises (500 to 999 employees)
10.3.5. Very Large Enterprises (1,000+ employees)
10.4. Industry Attractiveness Analysis By Enterprise Size
11. Industry Analysis 2019 to 2023 and Forecast 2024 to 2034, by End User
11.1. Introduction / Key Findings
11.2. Historical Industry Size (US$ million) Analysis By End User, 2019 to 2023
11.3. Current and Future Industry Size (US$ million) Analysis and Forecast By End User, 2024 to 2034
11.3.1. Banks
11.3.1.1. Payment processing
11.3.1.2. Identity verification
11.3.1.3. Loan origination
11.3.1.4. Personal finance management
11.3.1.5. Fraud detection
11.3.2. FinTech Corporations
11.3.2.1. Digital Wallets
11.3.2.2. Payment Processing
11.3.2.3. Lending
11.3.2.4. Banking APIs
11.3.2.5. Personal Finance Management
11.3.3. Investment Firms
11.3.3.1. Simplify Account Opening
11.3.3.2. Offer Payment Services
11.3.3.3. Provide Loans
11.3.3.4. Enhance Customer Experience
11.3.3.5. Improve Compliance
11.3.4. Enterprises
11.3.4.1. Payment Processing
11.3.4.2. Lending and Financing
11.3.4.3. Fraud Detection and Prevention
11.3.4.4. Account Management
11.3.4.5. Compliance and Regulatory Support
11.3.5. Others
11.4. Industry Attractiveness Analysis By End User
12. Industry Analysis 2019 to 2023 and Forecast 2024 to 2034, by Country
12.1. Introduction / Key Findings
12.2. Historical Industry Size (US$ million) Analysis By Country, 2019 to 2023
12.3. Current and Future Industry Size (US$ million) Analysis and Forecast By Country, 2024 to 2034
12.3.1. Germany
12.3.1.1. By Solution
12.3.1.2. By End-user
12.3.1.3. By Enterprise Size
12.3.2. Italy
12.3.2.1. By Solution
12.3.2.2. By End-user
12.3.2.3. By Enterprise Size
12.3.3. France
12.3.3.1. By Solution
12.3.3.2. By End-user
12.3.3.3. By Enterprise Size
12.3.4. United Kingdom
12.3.4.1. By Solution
12.3.4.2. By End-user
12.3.4.3. By Enterprise Size
12.3.5. Spain
12.3.5.1. By Solution
12.3.5.2. By End-user
12.3.5.3. By Enterprise Size
12.3.6. BENELUX
12.3.6.1. By Solution
12.3.6.2. By End-user
12.3.6.3. By Enterprise Size
12.3.7. Nordics
12.3.7.1. By Solution
12.3.7.2. By End-user
12.3.7.3. By Enterprise Size
12.3.8. Russia
12.3.8.1. By Solution
12.3.8.2. By End-user
12.3.8.3. By Enterprise Size
12.3.9. Poland
12.3.9.1. By Solution
12.3.9.2. By End-user
12.3.9.3. By Enterprise Size
12.3.10. Rest of Europe
12.3.10.1. By Solution
12.3.10.2. By End-User
12.3.10.3. By Enterprise Size
13. Industry Structure Analysis
13.1. Industry Analysis by Tier of Companies
13.2. Industry Share Analysis of Top Players
14. Competition Analysis
14.1. Competition Dashboard
14.2. Competition Deep Dive
14.2.1.1. Business Overview
14.2.1.2. Solution Portfolio and Strengths
14.2.1.3. Key Clients / Key partners
14.2.1.4. Go-to-Industry Approach & Strategies
14.2.1.5. Recent Developments (Partnerships, Mergers etc.)
14.3. Prominent BaaS Vendors in Europe
14.3.1. Starling Bank
14.3.2. Sopra Banking Software
14.3.3. Bankable
14.3.4. Treezor
14.3.5. BBVA
14.3.6. ClearBank
14.3.7. TrueLayer
14.3.8. Unit Finance
14.3.9. Railsbank
14.3.10. Yapily
14.3.11. FintechOS
14.3.12. Thought Machine
14.3.13. Upvest
14.3.14. Solarisbank
14.3.15. Green Dot Corporation
14.3.16. Q2 Software, Inc
14.4. Case Study
15. Assumptions and Acronyms Used
16. Research Methodology
Technology
November 2023
REP-GB-18292
225 pages
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Banking as a Service Platform Industry Analysis in Europe
