Embedded finance vs Banking as a Service (BaaS): What is the difference?
Discover how embedded finance and banking as a service compare and what their roles are in offering financial services.
Offering financial services as part of a SaaS platforms software solution presents a $185 billion opportunity. To capture it, platforms are transforming how they deliver value to their customers, from software providers to all-in-one solutions that offer financial services.
As more SaaS businesses look to capture this opportunity, two terms emerge: embedded finance and Banking as a Service (BaaS). While they’re closely related, they serve different purposes.
This blog will explain the differences between embedded finance and BaaS, how they work together, and how Adyen helps SaaS platforms capture the full benefits of embedded finance through a single, integrated solution.
In this blog, you’ll learn:
What is embedded finance?
What is banking as a service?
Embedded finance vs banking as a service
Key differences between embedded finance and BaaS
Embedded finance with Adyen
What is embedded finance?
Embedded finance is when a non-financial business integrates financial services into its own product. Embedded finance is most prevalent among SaaS platforms and involves offering financial products such as payments, accounts, card issuing, or business financing so that users can access them within the experience. This adds more value to their product, increases loyalty, and creates new ways to generate revenue.
What is banking as a service (BaaS)?
Banking as a Service (BaaS) is what makes embedded finance possible.
BaaS allows non-bank businesses such as SaaS platforms to use a licensed bank’s infrastructure to offer financial products through APIs and modular components. Instead of building a bank from the ground up, a SaaS platform can connect to a BaaS provider to get access to the regulated parts of banking. These include:
Financial products such as accounts and card issuing
Compliance functions such as anti-money laundering (AML) checks
Identity verification through Know Your Customer (KYC)
Risk and fraud management tools
Embedded finance vs banking as a service
While both work together and are both needed to offer financial services, they cover different aspects and responsibilities:
Embedded finance: integrates financial services directly into a platform's user experience, making them a natural part of the workflow. This makes actions like paying, receiving capital, or accessing funds part of the customer journey. For instance, a food and beverage SaaS platform that gives its bakery customers instant payouts after a day of sales.
BaaS: provides the underlying infrastructure and compliance that makes embedded finance services possible. A SaaS platform can use BaaS to connect to licensed financial providers through APIs. For instance, a SaaS platform that offers its customers branded business bank accounts by using a BaaS provider.
In short, BaaS is the foundation and embedded finance is the customer-facing layer that brings financial services to life.
Let's explore the key differences.
Key differences between embedded finance and BaaS
Provides the regulated financial infrastructure behind the scenes.
Embedded finance
Brings financial services into the product interface such as payments, loans, and bank accounts.
Includes banking licensing, compliance, and risk management, but platforms may still handle parts of customer data or fraud monitoring.
Embedded finance
Provides built-in compliance that stays aligned with global requirements without extra overhead.
Enables customization but requires more engineering effort.
Embedded finance
Offers pre-built functionality and modules to deliver financial services quickly inside a platform.
Provides the regulated financial infrastructure behind the scenes.
Embedded finance
Brings financial services into the product interface such as payments, loans, and bank accounts.
Includes banking licensing, compliance, and risk management, but platforms may still handle parts of customer data or fraud monitoring.
Embedded finance
Provides built-in compliance that stays aligned with global requirements without extra overhead.
Enables customization but requires more engineering effort.
Embedded finance
Offers pre-built functionality and modules to deliver financial services quickly inside a platform.
Embedded finance with Adyen
Adyen helps SaaS platforms capture the whole embedded finance opportunity.
With one integration, you can embed payments, Capital, Accounts, and Issuing. This opens new revenue streams by monetizing financial products, deepening user engagement, and positioning your platform as a financial hub for your customers.
Adyen provides both the infrastructure and the user-facing financial products. Since we built our technology in-house, we have complete control over performance, compliance, and product development. For SaaS platforms, this means faster go-to-market, global compliance out of the box, and full control without third-party dependencies.
Compliance and regulation are built into our solution. With our banking licenses, you can scale quickly while meeting the latest requirements.
Explore how Adyen helps SaaS businesses grow with embedded finance.