Avoiding Services-Heavy BaaS
Aaron Huang, Head of Commercial at Productfy, on choosing the right fintech customers
This is the core tradeoff in BaaS, the more a provider wins with large, custom fintech programs, the more it risks turning into a services heavy operator instead of a clean software platform. In practice that means more custom integrations, more compliance work, more bank specific workflows, and more roadmap work for a few high ACV customers. Productfy is explicitly positioned against that path, with a virtual ledger and migration tooling meant to keep customers portable across banks and reduce one off servicing.
-
A services heavy BaaS provider ends up doing bank ops by hand and in software, translating old bank file feeds, handling disputes, statements, card fulfillment, compliance checks, and custom customer requests. That work is valuable, but it scales more like headcount and account management than like pure self serve software.
-
The alternative model is aggregating the long tail of fintechs and brands, then making money when a minority of them break out. That looks more like Twilio or Shopify, where the platform is standardized, onboarding is faster, and revenue expands with customer growth instead of bespoke implementation work.
-
The ledger is the key control point. If the fintech owns its own ledger, or can easily migrate off the provider ledger, it gains leverage over both the bank and the BaaS platform. That is why Productfy frames ledger portability as strategic, while other platforms emphasize owning more of the stack to avoid paying third parties and preserve margins.
The market is moving toward platforms that can keep the startup path simple, then let larger customers peel off pieces without a painful rewrite. The winners will be the BaaS providers that package compliance and bank connectivity into repeatable software, while making ledger migration and bank portability easy enough that scale customers stay by choice, not because they are trapped.