Mima Benson-Aruna
2 min readAug 30, 2021


Understanding Banking-as-a-Service

Banking-as-a-Service (BaaS) allows smaller banks and neobanks to focus on their business of providing financial services without having to build or maintain very expensive banking infrastructure. BaaS, API banking, and open banking share some similarities, and many providers offer them as a package, but these models have differences.

Scaling a bank is an expensive endeavor and even more, takes a long time especially when integration to external parties is concerned. BaaS is a business model where technology providers, such as OnePipe, Mambu, or Bankable, provide all or part of the technology infrastructure required to provide a complete banking service to banks. BaaS vendors often provide services such as core banking services, card management systems, loyalty, notification services, and loan management systems.

Open banking, as I have previously written, is the standardization of API protocols for banks. This is when banks within a financial jurisdiction, usually driven by regulation, operate their API banking using a common API standard. The UK is the global leader in open banking while Nigeria has established itself as the pacesetter for developing countries. The crux of open banking is the concept that customers can control and manage the sharing of their data, and banks should not prevent the movement of information and customers.

API banking on the other hand, is a business model where banks, either as traditional banks, neobanks, or banks powered by BaaS, offer banking and financial services using APIs. This is an evolving model which has also led to what we term embedded finance.

In places where there is open banking regulation (such as the UK and soon to be, Nigeria), BaaS helps smaller banks, with less tech-savvy and budget, to reach compliance easily.

Bankable, a UK BaaS provider, has core services such as payment card programmes, which allows them to deploy tailor-made card programmes within weeks and digital banking. Bankable’s digital banking platform enables you to launch a digital bank from scratch using their APIs.

BaaS allows these smaller banks to become real challengers to traditional banks as they already would have the capabilities that BaaS provide out of the box. BaaS providers have better experience, expertise and the DNA to do API banking significantly better than traditional banks.Time to market, which is the time between inception to completion of a project, is greatly reduced with BaaS because the service comes with ready to launch. This allows neobanks to design their offerings and launch in weeks instead of months or years. Also, security risk is reduced because it is handled by the service provider.

Open Banking Nigeria already has the top BaaS providers as part of its membership, such as OnePipe and AppZone (BankOne), knowing the significant advantage that this brings to the game once the CBN goes live with open banking.