Banking as a Service (BaaS): How Evolve Open Banking Works
Open banking enables third-party financial organizations to provide consumer or business transactions, banking, payments, credit, and other financial banking services.
This is done using modern, best-in-class technology such as APIs or application programming interfaces. The purpose of open banking is sharing bank-like functionality with financial technology (fintech) and non- financial companies so that experiences can be tailored to fit the diverse needs of end users. At Evolve Open Banking, we offer a secure banking as a service (BaaS) environment, which connects end users to platforms and third parties while complying with banking regulations.
Our mission is to enable the power of banking for innovators, entrepreneurs, and consumers.
Evolve Open Banking, a division of Evolve Bank & Trust, is recognized as a global leader in the payments and “Banking-as-a-Service” (BaaS) industry, delivering unique solutions and innovative technology strategies to our partners.
Our best-in-class experts understand the rapid advances in the financial industry and, most importantly, we know consumer needs change constantly. Today’s end users expect speed, efficiency, and security in every transaction and the flexibility to choose transaction methods that work for them.
Open Banking with Evolve
Open banking has gained popularity because it can increase the speed and efficiency of financial transactions and enables a variety of applications to organize and manage finances in new and engaging ways for end users.
Open Banking relies on APIs (application programming interfaces) that let authorized third-party providers connect their software to bank systems to support account access, payments, and other services. In practice, an end user provides customer consent for a specific app or platform to access specific data or initiate specific actions, and those permissions govern what the third party can do and what the bank will share.
Open Banking and BaaS are related. BaaS drills down further into the concept of Open Banking. BaaS is the products financial institutions offer to non-financial and financial companies to enable banking services. BaaS solutions allow the third-party company to access the functionality of the bank.
For this reason, open banking can solve many problems for consumers and businesses. The security of the digital economy in open banking addresses the issue of lack of trust in banks. It also can increase the speed to market of fintech businesses.
Card issuance is one component of a modern approach to financial management within Open Banking. Evolve’s Card issuance solution creates, issues, and manages credit and debit cards. These cards can either be completely digital or also have a physical card component.
A benefit of issuing a virtual-only card is the ability to prevent fraudulent transactions via dynamic card number provisioning (a feature that can generate or rotate card details for specific transactions) or other digital fraud prevention features.
Benefits of Open Banking With
Evolve Bank & Trust
Open banking offers benefits that enhance financial literacy for end users and provide solutions for businesses. With the right tools, organizations can leverage Open Banking to improve financial management and deliver seamless service integration.
- More Effective User Experiences
- Customer-Focused Products and Services
- Improved Customer Service & Trust
- Customization Options
- Improved Financial Management
- Enhanced Security
- Retain and Engage End Users
- Faster and Smoother Transactions
- Opportunities to Diversify Offerings
- Engage and Retain Customers
- Data-Powered Personalization
- Increase Conversions
- Easier Checkout Flow
- More Payment Options
Open Banking vs. BaaS
Open banking vs. BaaS comes down to what you’re trying to deliver: Open Banking focuses on authorized data access and certain API-enabled actions, while BaaS focuses on delivering regulated banking products and infrastructure through a bank partner. Embedded finance often uses BaaS to place those financial capabilities directly inside your existing app or website. Choose Open Banking when you primarily need permissioned access to accounts and transactions to power experiences like personal finance insights, verification, or payments. Choose BaaS when you want to offer banking products (like accounts or cards) under your brand without becoming a bank. Choose embedded finance when you want financial features to live inside a non-financial product journey, such as checkout, invoicing, or loyalty.
Our BaaS Environment
All financial services are maintained by a secured environment. As a BaaS provider, we guide our customers through the steps of creating their own secured financial environment to support various use cases.
Our solutions are designed to be flexible, so they can be tailored to solving the financial needs of your end users.
Third Parties have a direct relationship with Evolve.
May be any of the following types:
- ISOs (Independent Sales Organization) (partners that help distribute and support payment or merchant programs)
- TPPs (Aggregator Payment Processor) (authorized companies that connect to banking services and data through APIs)
- TPSs (Aggregator Sender) (companies that submit payments or transactions on behalf of others)
A company that wants to utilize Evolve solutions for their End Users.
May be any of the following types:
- FinTechs
- Merchants
End users (consumers or businesses) typically authorize Evolve to open accounts through a platform’s onboarding process, including identity checks such as KYC (Know Your Customer) and AML (anti-money laundering) requirements.
May be any of the following types:
- Consumers
- Businesses
Forging powerful alliances to drive innovation and improve customer experiences.
Partnerships deliver financial solutions which are:
- Smarter
- Faster
- More personalized
The Difference Between Open Banking, Embedded Finance, and Banking as a Service (BaaS)
Open Banking allows banks to host accounts and provide transaction methods for financial and non-financial businesses to embed into mobile applications. Banks provide a suite of Banking as a Service (BaaS) products using technology like APIs. These technologies enable the capability for other organizations to embed financial functionality into other products and services
Let’s look at all three in more detail.
An example of Open Banking would be a personal finance app enabled by banking technology that lets customers view insights into their monthly spending online.
For example, a department store would like to issue a branded credit card for their store with different features, rewards, and perks. The department store can partner with a bank to issue the card and obtain end users without becoming a financial institution themselves. The department store would still be heavily involved in compliance and regulatory obligations, but the banking piece is managed by the bank.
The concept of embedded finance can create a personalized financial experience for dedicated end-user bases of existing businesses that adds value to the customer.
An example of BaaS is a car company offering financing directly through its website in partnership with a traditional bank. It can provide all the necessary services under its own brand while maintaining compliance with banking regulations and without the burden of registering and maintaining its own financial institution charter.
Evolve Bank & Trust supports these partnerships with bank-level risk management expectations, a structured approach to third-party relationships, and security-oriented integration methods that favor authorized API access over credential-based approaches like screen scraping.
BaaS Use Case Examples
There are four main users of BaaS and Open Banking: traditional banks, fintechs, non-fintech companies, and end users. Traditional banks have the necessary licensure to provide core financial services, which allows fintechs and non-fintechs to embed BaaS functionality into their user experiences. Here are some use cases for BaaS.
Frequently Asked Questions
What is banking as a service (BaaS)?
Banking as a Service (BaaS) is a model where a licensed bank provides the underlying banking capabilities—like accounts, payments, and card programs—so your business can offer financial features through APIs inside your product.
What is the difference between BaaS and open banking?
Open banking focuses on secure connectivity and data sharing between financial institutions and third parties. BaaS typically goes further by packaging bank capabilities into products you can embed and operate as part of your customer experience.
What is the difference between BaaS and embedded finance?
BaaS is the bank-provided infrastructure and product set. Embedded finance is how a non-financial company places those financial features into its app, website, or customer journey.
Do I need a banking license to offer financial services through BaaS?
You typically don’t need your own banking license to offer financial features through BaaS, because the bank provides the license and regulated banking layer. You still need to meet program requirements and work within compliance expectations set by the bank and applicable regulations.
Evolve is proud to be a principal member of both Mastercard and Visa and a Member FDIC.
MasterCard® is a registered trademark of MasterCard International Incorporated. Visa® and Visa Signature® are registered trademarks of Visa International Service Association and used under license.
Interested in becoming an Evolve Partner?
To find out more about how we can support your business and meet end users’ needs at Evolve Open Banking, contact us today.
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