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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 section comprehensively evaluates three interrelated industries: the Europe banking-as-a-service platform industry, the open banking industry, and the embedded banking industry. It dissects the distinctive characteristics of each industry, encompassing their respective CAGRs and values, while looking into the pivotal factors that influence their growth trajectories.
Europe Banking as a Service Platform Industry Analysis:
Attributes | Europe Banking as a Service Platform Demand Outlook |
---|---|
CAGR (2024 to 2034) | 15.0% |
Industry Growth Factors for BaaS Platforms in Europe | Growing adoption of BaaS platforms in diverse sectors is set to boost industry growth. |
Restraining Factor | The adoption of BaaS systems can be hampered by the difficult and time-consuming process of integrating with current infrastructure. |
Banking-as-a-Service (BaaS) Platform Industry Trend | Several areas are implementing or extending open banking laws, which force established banks to disclose their data and services to other vendors. |
Open Banking Industry Outlook:
Differentiating Aspects | Open Banking Industry Analysis |
---|---|
CAGR (2024 to 2034) | 19.7% |
Growth Factors | Open banking has grown in prominence over the past few decades due to its low cost, convenience of use, instant access, better security, and quick service. |
Opportunities | Several major firms are investing heavily in offering unique product versions in order to grow their consumer base and keep a competitive advantage. |
Key Trends | The growing desire for improved client experiences, as well as the broad adoption of cloud-based services by banks and financial companies. |
Embedded Banking Industry Analysis:
Differentiating Aspects | Embedded Banking Demand Outlook |
---|---|
CAGR (2024 to 2034) | 22.1% |
Growth Factors | Increasing adoption of embedded banking systems by several end users is boosting industry growth. |
Opportunities | Escalating awareness about the potential benefits of embedded banking will create growth opportunities for vendors. |
Key Trends | Growing popularity of AI-driven embedded banking platforms is a key growth-shaping trend. |
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
Table 1: Industry Value (US$ million) Analysis (2019 to 2023) By Solution Table 2: Industry Value (US$ million) Forecast (2024 to 2034) By Solution Table 3: Industry Value (US$ million) Analysis (2019 to 2023) By Enterprise Size Table 4: Industry Value (US$ million) Forecast (2024 to 2034) By Enterprise Size Table 5: Industry Value (US$ million) Analysis (2019 to 2023) By End User Table 6: Industry Value (US$ million) Forecast (2024 to 2034) By End User Table 7: Industry Value (US$ million) Analysis (2019 to 2023) By Country Table 8: Industry Value (US$ million) Forecast (2024 to 2034) By Country
Figure 1: Industry Size (US$ million) and Y-o-Y Growth Rate from 2024 to 2034 Figure 2: Industry Size and Y-o-Y Growth Rate from 2024 to 2034 Figure 3: Industry Value (US$ million), 2019 to 2023 Figure 4: Industry Value (US$ million), 2024 to 2034 Figure 5: Industry Value Share Analysis (2024 to 2034) By Solution Figure 6: Industry Value Y-o-Y Growth Trend Analysis (2019 to 2034) By Solution Figure 7: Industry Attractiveness By Solution Figure 8: Industry Value Share Analysis (2024 to 2034) By Enterprise Size Figure 9: Industry Value Y-o-Y Growth Trend Analysis (2019 to 2034) By Enterprise Size Figure 10: Industry Attractiveness By Enterprise Size Figure 11: Industry Value Share Analysis (2024 to 2034) By End User Figure 12: Industry Value Y-o-Y Growth Trend Analysis (2019 to 2034) By End User Figure 13: Industry Attractiveness By End User Figure 14: Industry Value Share Analysis (2024 to 2034) By Country Figure 15: Industry Value Y-o-Y Growth Trend Analysis (2019 to 2034) By Country Figure 16: Industry Attractiveness By Country Figure 17: Germany Industry Absolute $ Opportunity (US$ million), 2019 to 2034 Figure 18: Italy Industry Absolute $ Opportunity (US$ million), 2019 to 2034 Figure 19: France Industry Absolute $ Opportunity (US$ million), 2019 to 2034 Figure 20: United Kingdom Industry Absolute $ Opportunity (US$ million), 2019 to 2034 Figure 21: Spain Industry Absolute $ Opportunity (US$ million), 2019 to 2034 Figure 22: BENELUX Industry Absolute $ Opportunity (US$ million), 2019 to 2034 Figure 23: Nordics Industry Absolute $ Opportunity (US$ million), 2019 to 2034 Figure 24: Russia Industry Absolute $ Opportunity (US$ million), 2019 to 2034 Figure 25: Poland Industry Absolute $ Opportunity (US$ million), 2019 to 2034 Figure 26: Rest of Industry Absolute $ Opportunity (US$ million), 2019 to 2034
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Published : November 2023
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