BaaS shifting to utility model
Roy Ng, co-founder and CEO of Bond, on BaaS's business model
This points to BaaS becoming less like a toll road on every dollar spent, and more like metered software that charges for the work of running accounts, cards, compliance, and data pipes. Bond’s view is that the brand or fintech should keep most interchange because it owns the customer, while the infrastructure layer gets paid for onboarding, ledgering, KYC, transaction processing, and program management across many customers.
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In practice, the utility work is the messy operational layer. Bond bundles bank access, processor integrations, compliance support, and a single data model, so a software company can launch debit, credit, accounts, ACH, and lending without stitching together separate vendors itself.
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The reason this model is attractive is margin pressure. In BaaS, fintech customers usually capture the biggest share of interchange, while banks and platform providers get compressed as volume scales. Illustrative splits in the market memo leave the program manager with a thin slice, especially in consumer debit.
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The tradeoff is clear against going direct. A company that works with a full BaaS platform gives up some revenue in exchange for faster launch and less bank management. Larger brands can eventually justify direct bank and processor relationships, but startups and vertical SaaS firms often prefer the simpler utility layer.
Over time, the winning BaaS platforms are likely to look more like financial infrastructure utilities, with steadier software and service fees, and less dependence on interchange sharing. That pushes the market toward platforms that own the hardest plumbing, the cleanest data layer, and the broadest product coverage, because those are the pieces customers keep paying for even as revenue share compresses.