Ivaylo Bozoukov - Infrastructure for the Next Generation of Finance

Not long ago, building a financial product meant spending years obtaining a banking licence, assembling a compliance team, and constructing infrastructure from the ground up. That model has not disappeared, but it is no longer the only route in.

Banking as a Service has changed the economics of financial services delivery. The global BaaS market now sits somewhere between $35 and $45 billion in 2026, with projections pointing to $75 to 90 billion by the early 2030s. Annual growth remains in the 16-18% range . That illustrates a structural shift in how financial products are built, distributed, and consumed.

What BaaS Actually Is and Why It Matters

A licensed bank or regulated institution opens up its infrastructure through APIs, allowing non-bank companies to offer financial products (accounts, payments, cards, lending) under their own brand, without obtaining a banking licence themselves. The licensed institution handles the regulated backend , and the partner company focuses on customer experience and product design.

What makes 2026 different from the early BaaS experiments is who is using it. Large retailers, telecom operators, SaaS platforms, and online marketplaces are now building financial features directly into their ecosystems. For a payroll platform, that might mean offering employee wage accounts; for a mobility app, embedded wallets and driver payment cards; and for a B2B marketplace, built in trade financing.

Ivo Bozukov sees this broadening of the user base as the defining characteristic of where BaaS has arrived. " The interesting shift isn't the technology. It's who is now in the room. BaaS used to be a fintech conversation. Now it's being discussed in the boardrooms of retailers and telecoms and SaaS businesses who have realised that financial services are a natural extension of what they already do. "

The Compliance Dimension That Cannot Be Ignored

The growth of BaaS has not gone unnoticed by regulators. Across Europe, the UK, and the United States, scrutiny of bank-fintech arrangements has intensified considerably. The lessons have been learned the hard way in some cases. The collapse of Synapse, which acted as an intermediary between fintech client firms and four partner banks, exposed the dangers of unclear liability and fragmented compliance ownership . Monzo received a £21.1 million fine from the FCA in 2025 for failings in its financial crime controls during customer onboarding .

The compliance question in BaaS is genuinely complex. A common misconception is that regulatory responsibility sits entirely with the licensed bank. It does not. Fintech partners retain obligations around customer onboarding, AML and KYC controls, consumer protection, and operational conduct. The distribution of responsibility across multiple entities creates real visibility gaps, particularly in transaction monitoring and suspicious activity reporting, where one organisation may onboard the customer while another manages the interface and a third performs the underlying monitoring.

Ivaylo Bozoukov is direct about where this leads. " Compliance in embedded finance isn't something you outsource and forget about. The firms that treat it as the bank's problem are the ones that end up in enforcement actions. You need complete clarity on who owns what across the entire chain, and you need to test that it actually works. "

The EU's Anti-Money Laundering Regulation has reinforced this. Licensed institutions remain fully accountable for AML obligations even where functions are operationally performed by a fintech partner . That expectation is now driving BaaS providers to build compliance infrastructure into their platforms rather than treating it as an optional layer.

Who Chooses BaaS and Why

For businesses evaluating BaaS, the decision framework has matured. Feature lists matter less than they used to. What organisations are now weighing is geographic coverage, licensing model, compliance strength, and long-term scalability.

The licensing distinction is particularly important. An Electronic Money Institution licence permits payment services and e-money issuance, while a full banking licence opens up deposit-taking and lending . Choosing the wrong type of partner for the product you intend to build creates friction that is expensive to resolve later.

There is also a growing recognition that BaaS providers are not interchangeable. The sponsorship model that works well for a US startup launching embedded accounts looks very different from the infrastructure required by a European enterprise building a cross-border payments layer for corporate clients.

" The mistake I see businesses make is choosing a BaaS partner based on what they can launch in month one, " says Ivo Bozukov. "The question you should be asking is whether this infrastructure can support where you want to be in year three. Speed to market matters. But not if it costs you your regulatory standing."

Where This Is Heading

The direction of travel for BaaS mirrors the broader trajectory of financial services: more modular, more embedded, more regulated. Platforms that once offered payments as an afterthought are building comprehensive financial ecosystems. The neobanks that started on BaaS rails and have since obtained their own licences represent only one outcome. Many businesses will remain on BaaS infrastructure indefinitely , treating it as a strategic partnership rather than a temporary stepping stone.

What is becoming clear is that the competitive advantage will belong to those who treat compliance and infrastructure as interconnected rather than separate concerns. The BaaS providers gaining ground are those who have built those two things into a single, coherent offering. The businesses building on top of them will be defined by how well they understand that distinction.