European SMEs trust BaaS will overtake traditional banking

European SMEs trust BaaS will overtake traditional banking

Vodeno and Aion Bank have commissioned an independent survey with over 1,000 businesses from the UK, Belgium, and the Netherlands to showcase the potential of Banking-as-a-Service (BaaS).


Vodeno and Aion Bank commissioned a survey with businesses from the UK, Belgium, and the Netherlands to showcase the potential of Banking-as-a-Service (BaaS).


Over half of European business leaders expect Banking-as-a-Service (BaaS) to make traditional banking obsolete, according to new research from Vodeno/Aion. The BaaS provider commissioned an independent study among more than 1,000 senior decision-makers within businesses based in the UK, Belgium and Netherlands. The respondents were surveyed across 10+ industry sectors, including Architecture, Engineering and Building, Arts & Culture, Education, Financial Services, Healthcare, HR, IT & Telecoms, Legal, Manufacturing & Utilities, Retail, Catering & Leisure, Sales, Media & Marketing, Travel & Transport.

The report titled ‘Banking-as-a-Service 2.0 – Why Embedded Finance will make its mark in 2023’ shows that 51% of survey respondents believe BaaS will spell the end of traditional banking. 

Vodeno/Aion’s survey discovered that having the necessary licence and compliance expertise is set to play a more prominent role in BaaS adoption. Almost three in five (58%) respondents believe BaaS providers that offer to use their licence alongside a tech solution are the ones that will shape the BaaS market in the years to come. 

At present, 39% of respondents have already implemented BaaS services and products, with an additional 38% considering using BaaS in 2023. When surveyed about which BaaS products were planned for implementation, foreign exchange (48%), Buy Now, Pay Later (48%), SME lending (47%), and loyalty schemes (46%) were among the most popular. 

Of the respondents who have not implemented BaaS solutions to date, 32% said they do not know enough about BaaS, 29% said there is a lack of understanding about the products available, and 27% cited compliance and security concerns as key barriers to adoption. 

Vodeno/Aion’s research underscored the importance of embedding financial services into the customer experience, with 24% stating that they would like to see their BaaS provider showing a better understanding of their customer journey. Innovating the checkout experience is the key desired outcome for many BaaS adopters. Previous Vodeno/Aion research highlighted businesses that implemented embedded financial products were motivated by new revenue streams (41%), growth in customer basket (40%), and improved customer loyalty (40%). 

Business leaders offered several predictions for the growth of the BaaS market. Most (59%) expect the lines between ecommerce platforms and traditional banking services to blur in 2023 because of increased BaaS adoption. Even more (65%) expect to see more consumers using banking services via non-financial brands enabled by BaaS, rather than traditional banking. A further 60% predict a decline in traditional branch-based banking.

Looking to the future, almost two-thirds (65%) of those surveyed about industry trends predict that more Big Tech firms will move to deliver financial services, and over half (56%) believe the cost-of-living crisis will act as a catalyst for increased adoption.

More about Vodeno/Aion Bank

In July 2022, Tom Bentley, the Chief Commercial Officer at Vodeno, shared for The Paypers an in-depth analysis of the Open Banking impact on the retail industry, showcasing the importance of embedded finance for brands that strive for success. We encourage you to visit our voice of the industry section to find out more.

In October 2022, NatWest announced a strategic partnership with the Vodeno Group to create a Banking-as-a-Service (BaaS) business in the UK. The partnership sought to enable businesses to embed financial services products such as payments, deposits, point-of-sale credit, and merchant cash advances directly in their ecosystem by leveraging the Vodeno Group’s BaaS technology, NatWest Group’s banking technology, and UK banking licences.

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