BaaS Struggles With Custom Fintechs
Aaron Huang, Head of Commercial at Productfy, on choosing the right fintech customers
The key implication is that novel fintech programs stop looking like software and start looking like custom banking operations. General BaaS platforms win by turning repeatable tasks, like opening accounts, issuing cards, and moving ACH, into standard APIs. Earned wage access and similar products break that mold because each version depends on custom underwriting rules, payroll data, bank risk appetite, and legal structure, so the startup often has to sell the program directly to a sponsor bank instead of buying it off the shelf.
-
BaaS platforms are built to aggregate common needs across many customers. Once a fintech asks for a program with unusual rules, the platform either turns into a services shop or says no. That is why the biggest, most differentiated fintechs often go straight to banks and keep tighter control of their product design.
-
Earned wage access is a good example of why this is hard. A serious version needs live payroll and time and attendance data, logic for how much of a shift can be advanced, repayment routing through direct deposit, and a bank and legal team comfortable with the structure. That is much more than a card and account API.
-
This also explains why many BaaS companies tilt toward embedded finance for non fintech brands. A retailer or software company usually wants standard rewards, payouts, or accounts that boost retention, not a brand new credit or cash flow product. Those use cases are easier to standardize and sell repeatedly.
Over time, the idiosyncratic programs that show real demand will get packaged into narrower infrastructure layers, much like card issuing and ACH did before them. The winners will be the companies that first prove the legal and bank model directly, then become the template that broader BaaS platforms eventually copy and distribute.