Banking-as-a-Service
A licensed bank renting out accounts, cards and payments over an API to companies that want to behave like a bank without becoming one.
The stack usually has three layers. At the bottom sits a sponsor bank holding the licence, the deposit insurance and access to clearing. In the middle, a middleware provider wraps the bank's capabilities in REST APIs, complete with ledger, card issuing and KYC flows. On top sits the fintech or app that owns the customer. Germany's Solaris, Britain's Railsr and America's Synapse and Unit are the textbook middle layers. The model turned launching a neobank from a multi-year project into a matter of months.
The weakness is that responsibility ends up as scattered as the ledgers. When Synapse went bankrupt in 2024, tens of thousands of end customers had their accounts frozen while banks and intermediaries argued over balances. Around the same time several US sponsor banks were hit with regulatory orders over anti-money-laundering controls for customers they barely knew. A banking licence, it turns out, cannot be outsourced — a lesson the industry paid full price for.