Scaling fintechs unbundle BaaS
Former Galileo executive on differentiation and scalability in the BaaS market
This is really a claim about who captures control and economics once a fintech program gets large enough to matter. Early on, an all in one BaaS provider is the fastest way to launch because it bundles the sponsor bank, compliance workflow, network setup, and processor into one contract. But as a program scales, the brand has more reason to unbundle that stack, own the bank and network relationships itself, and keep more of the interchange and product flexibility.
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Managing the relationships directly means picking the sponsor bank, negotiating the processor contract, and deciding how card, deposit, or credit products are configured. That matters because banks differ on what they will approve, how strict they are on compliance, and how quickly new products can launch.
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The money reason is simple. In a bundled model, more parties take a cut of interchange. In the BaaS stack, the program manager alone can take about 0.25%, and at scale the largest fintechs usually push more of that economics back to themselves while banks and middleware get compressed.
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This is why the market splits by customer type. Startups buy simplicity and fewer moving parts. Larger brands and mature fintechs increasingly want facilitation rather than abstraction, with tools that help them work directly with banks instead of hiding the bank relationship entirely.
The direction of travel is toward thinner BaaS layers and more direct ownership by scaled programs. The winners will be platforms that help companies manage bank oversight, compliance, and multi partner operations without forcing them to give up the customer economics or strategic control that come with owning the core relationships.