If you’re looking to understand the difference between open banking and Banking as a Service (BaaS), you might want to know which is the best solution to integrate bank-like functionalities into your infrastructure. For example, you may want to:

• Launch innovative data and payment services across new regions efficiently.
• Onboard customers compliantly.
• Scale your business without compromising speed or security.

We’ll compare both alternatives, including specific use cases, to guide you toward the right choice for your business.

In this article:

• What is the difference between open banking and banking as a service?
• Open banking vs BaaS: A comparison
• Common use cases for BaaS and open banking
• When open banking might be a better fit for your business
• Why use Yapily for your open banking needs
• How Juni leveraged Yapily’s open banking infrastructure to transform financial management for e-commerce businesses

Not sure which solution is best for your business: open banking or BaaS? Learn more about Yapily’s robust open banking capabilities to decide for yourself. Contact us today.

What is the difference between open banking and banking as a service?

Banking as a Service (BaaS) enables businesses—such as fintechs and non-financial companies—to integrate banking infrastructure and offer financial products like account management, card issuance, and lending. Through APIs provided by licensed financial institutions, businesses using BaaS can provide their customers with fully functional bank accounts, virtual IBANs, and wallets.

For example, a neo bank catering to small and medium-sized businesses (SMBs) can leverage BaaS to offer its customers dedicated business accounts, expense cards, and financial management tools—all embedded within its platform. BaaS is ideal for companies looking to provide full banking capabilities under their own brand.

Open banking, on the other hand, is designed to facilitate secure access to financial data and enable account-to-account (A2A) payments, without the need for businesses to create or manage customer accounts. Customers continue using their existing bank accounts while businesses integrate open banking APIs to retrieve financial data or initiate payments with explicit user consent.

Unlike BaaS, open banking APIs are standardised, enabling businesses to connect with multiple banks without the need for custom integrations. This also ensures compliance with financial regulations.

For example, a personal finance app can use open banking APIs to access data from multiple financial institutions, allowing customers to view all their bank accounts in one place. Similarly, businesses can facilitate direct bank payments without relying on card networks, streamlining transactions for both merchants and customers.

While BaaS is well-suited for businesses that need to offer new accounts, cards, or lending products, open banking provides a more lightweight, flexible way to access financial data and process direct payments. Businesses can choose the model that best aligns with their goals—whether they require full banking infrastructure or simply want to enhance their existing services with seamless payments and financial insights.

Read more: What is open banking

Open banking vs BaaS: A comparison

When comparing BaaS vs open banking, you can look at their different models, use cases, implementation, and security requirements to understand which is more suitable for your business needs.

Here’s a breakdown of each service:

For more information on open banking, see our complete guide.

Common use cases for BaaS and open banking

Here are some of the most common use cases for BaaS and open banking:

Five use cases for BaaS

1. Neo banks and challenger banks. New banking platforms can build fully digital banking solutions that include all common services, from account management and card issuance to loans.
2. E-commerce and retail. Online retailers and wholesalers can offer branded payment cards, financing options like buy now pay later (BNPL) or embedded wallets to improve customer experience and loyalty.
3. Marketplaces and gig platforms. BaaS can enable payouts to sellers or contractors through digital wallets or dedicated accounts, facilitating exchanges and reconciliation.
4. Fintechs.Innovative firms can offer niche financial products like lending platforms, budgeting apps, or wealth management tools with minimal backend investment.
5. Travel and hospitality.Online travel agencies and hospitality platforms can use multi-currency accounts to facilitate cross-border payments, or even issue travel cards to improve payment processing and refunds.

Five use cases for open banking

1. Payment service providers (PSPs). Through an open banking API, PSPs can offer third parties A2A payments to reduce reliance on card networks, lower transaction costs, and enable faster settlements and real-time payment confirmation for merchants.
2. Lenders. With access to financial data, lenders can better assess customer affordability, automate credit checks, and verify customer accounts during onboarding.
3. Subscription-based businesses. Companies like SaaS, edtech, streaming and health and wellness service firms can leverage VRPs for flexible recurring payments, reducing friction compared to direct debits and lowering costs compared to card payments.
4. Personal finance apps. With a single API integration, fintechs can aggregate bank account data to offer clients budgeting tools, financial insights, and spending analysis.
5. Payroll and accounting services. Accounting and payroll software providers can prevent users from leaving their platforms by facilitating bulk payments, such as salary disbursements or vendor payments, through a single API request in-app.

While we listed five of the most common open banking use cases above, there are many more. Take a look at this list of 20 different open banking use cases.

When open banking might be a better fit for your business

If you’re comparing Banking as a Service (BaaS) vs. open banking, you might be looking for the best way to embed financial services into your business.

However, if you don’t need to issue new accounts, IBANs, or cards—and instead just want a seamless, cost-effective way to move money—open banking payments could be the better solution.

Rather than relying on traditional payment rails built into BaaS, open banking enables fast, direct account-to-account (A2A) payments while keeping integration simple. Here’s how it compares:

Easier integration with lower maintenance

BaaS payments often require multiple API integrations—one to access the provider’s infrastructure and others for different payment methods or financial products. This can introduce complexity and require operational changes to fit within the provider’s system.

With open banking, you only need a single standardised API to connect directly to multiple banks. This makes it easier to integrate, faster to implement, and simpler to maintain, especially for businesses that already have a payment infrastructure in place.

Lower transaction costs by bypassing card networks

Most BaaS-powered payment solutions rely on card networks, which involve processing fees from issuers, acquirers, and networks. These fees can be significant, especially for businesses handling high transaction volumes.

With open banking, payments bypass card networks entirely, reducing transaction costs, improving settlement speed, and increasing margins. Direct A2A transactions offer a more efficient and cost-effective alternative to traditional payment methods.

Read more: Open banking vs card networks

Customisable payment experiences without requiring new accounts

BaaS solutions typically involve issuing new bank accounts or virtual IBANs, which means customers have to onboard into a separate banking system.

With open banking, customers keep their existing bank accounts while businesses integrate payments and financial data. This allows businesses to:

• Offer branded, customisable payment experiences while avoiding the complexity of managing banking infrastructure
• Enable seamless payments for customers without requiring them to open a new account
• Support a range of payment models, from recurring subscriptions to instant one-time payments

Faster go-to-market with fewer operational hurdles

BaaS solutions often require extensive regulatory approvals, compliance checks, and infrastructure setup, which can extend launch timelines.

Open banking, by contrast, allows businesses to start processing payments quickly with minimal disruption. A single API integration makes it possible to access payment rails directly without the need for additional banking licenses or operational overhead.

Security and compliance built into the payment process

Managing a full banking stack means handling sensitive customer data and navigating complex security requirements.

Open banking ensures built-in security and regulatory compliance, including:

• Strong Customer Authentication (SCA) for fraud prevention using multi-factor verification
• User-controlled consent, giving customers full transparency over who can access their data and payments
• Compliance with GDPR, PSD2, and ISO 27001, meeting strict financial security standards

By reducing the number of intermediaries involved in transactions, open banking minimises security risks while providing a compliant, transparent payment experience.

Why choose Yapily for your open banking needs

If you’ve decided that open banking is a better fit for your needs than BaaS, consider using Yapily.

Yapily empowers businesses by helping them implement open banking. We provide the infrastructure to facilitate secure, efficient account-to-account payments and access financial data, enabling you to innovate, reduce costs, and improve customer experiences.

As we’re an infrastructure provider, we offer full white-labeling. This means you can create a payment and data solution that is positioned as your own brand, without investing in expensive BaaS services that include features you may not need.

Here are three more reasons to choose Yapily for open banking:

1. Scale across regions with comprehensive open banking coverage and robust infrastructure

If you’re looking to save on complexity while expanding your business, Yapily can help. With our open banking infrastructure, you’ll have coverage in nearly 2,000 banks across 19 European countries, including the UK, France, Germany, and the Netherlands.

Our extensive connection reduces the need for multiple providers for both payments and data and helps you achieve seamless cross-border functionality. With Yapily, you can expand your customer base and streamline your international operations without geographical limitations.

Yapily’s robust API also handles high volumes securely no matter the region you’re expanding into, ensuring smooth payment processing even as you scale. We designed our infrastructure with a resilient architecture to ensure reliable performance and minimal downtime, even under heavy transaction volumes.

Check out our API docs to learn more about our technical capabilities.

For example, the school payment software company, Esenda, offered an open banking solution to schools and parents to speed up fee payment processing and reduce manual reconciliation. But their solution only covered a limited number of banks.

With Yapily, Esenda increased their coverage to process £9m transactions in just three months with a 100% uptake of open banking payments by their customers.

Learn more about the Esenda and Yapily collaboration

2. Offer both open banking data and payment services through one provider

If you’re looking to access data services and Pay by Bank without relying on card networks or expensive data solutions, you don’t need to create a comprehensive banking infrastructure.

With Yapily’s open banking infrastructure, you can tap into a wide range of payment and data services, including:

Payment initiation service (PIS)

PIS enables you to offer open banking initiation to provide single account-to-account payments, VRPs, and bulk payments to automate multiple transactions at once.

Account information service (AIS)

You can use Yapily Data to access consumer data, enabling risk management and customer behaviour and affordability analysis. For greater insights, Yapily Data Plus adds deep data enrichment, such as 90+ categories, allowing you to make better sense of data, build profiles and enhance decision making. With Yapily Validate, you can confirm customer accounts, speed up onboarding and ensure compliance with KYC functionality.

Yapily’s comprehensive, flexible open banking functionality enables you to build innovative solutions and enhance and complement existing services whether you’re an infrastructure company, payment network, software business or bank.

For example, the PSP Yotta Pay uses both payment and data services through Yapily’s API to provide merchants with a more affordable and convenient alternative to card payments. Merchants offer instant A2A payments online and in-store, while accessing data to verify end-customer account details securely and compliantly.

This combined payment-and-data solution not only increased operational savings by 90% for Yotta Pay customers, it also reduced risk and fraud while boosting online checkouts by 200%.

Read more on the Yotta-Yapily partnership

3. Use our PISP and AISP authorisation to accelerate your time-to-market

Becoming an authorised PIS provider (PISP) is a lengthy, resource-intensive process, especially if you’re a software business looking to integrate payments and data access for the first time.

Instead, we help you implement open banking into your business. For example, you can leverage Yapily’s PISP and/or AISP authorisation to get started more efficiently, allowing for quick product development and launching. Our dedicated onboarding service and expert support can provide you with extra guidance, so you can optimise user adoption and the overall open banking experience.

You’ll also have access to advanced technical solutions that facilitate seamless integration. This includes comprehensive testing and efficient onboarding processes, enabling you to deploy and scale your open banking solutions smoothly.

One example of how Yapily’s PISP license helped launch an innovative product was the collaboration with Trilo, a payment and loyalty network. Trilo wanted to help local businesses:

• Save on expensive card fees by providing an open banking alternative
• Boost customer loyalty by offering customer behavioural insights to help businesses understand what customers valued most.

But the cost and complexity of building out this solution on their own proved too time consuming and resource intensive for Trilo.

By partnering with Yapily and leveraging our PISP license, Trilo could go to market quickly. They launched in one of their key markets and saw user adoption increase by 1300%.

Discover more in the Trilo-Yapily case study

How Juni leveraged Yapily’s open banking infrastructure to transform financial management for e-commerce businesses

Juni, a financial platform tailored to the e-commerce industry, addresses operational challenges common to this sector. Online retailers often have difficulty in managing multiple accounts with high transaction volumes and tracking their cash flow, which doesn’t allow for accurate visibility into their financial health.

Accessing working capital is also challenging because traditional banks don’t understand the nuances of e-commerce, deeming them more risky.

By leveraging Yapily’s open banking infrastructure, Juni creates an end-to-end solution, simplifying financial operations for e-commerce businesses.

Using Yapily Data, Juni taps into broad bank account coverage to aggregate real-time financial data from multiple accounts into a unified platform. This provides e-commerce companies with instant visibility into their finances while enhancing cash flow management.

Yapily Data also provides Juni with comprehensive financial insights for more accurate credit assessments. This means Juni can build and personalise credit lines based on customer affordability. Juni can even proactively adjust credit, based on an e-commerce’s current financial standing, saving businesses time they usually spend in applying for additional credit.

“Instead of them having to come to us, Yapily Data means we can meet customers where they are and offer them a boost in working capital without them even asking. Open banking helps customers feel understood.” — Shelley Havemann, Juni Product Director

Juni also uses Yapily Payments to enhance their end-customers’ experience. Merchants can make instant A2A payments to top up their Juni accounts, facilitating repayments.

Since partnering with Yapily, Juni has achieved impressive results, including:

• Over £2m in processed open banking payments
• 500% increase in open banking usage
• Increased number of high-value transactions

Juni also expanded account visibility from three to 18 months, providing end customers with greater finance visibility and improving Juni’s credit decision making.

The Juni-Yapily partnership shows how open banking, with its real-time data access and payment initiation capabilities, can provide a complete financial solution for innovative companies, helping them grow.

Read the complete Yapily-Juni case study

Choose open banking with Yapily

Now you know the difference between BaaS and open banking. BaaS can help you embed and offer financial products, while open banking empowers businesses to provide enhanced financial services and payment options.

With Yapily’s open banking infrastructure, you can launch innovative data and payment services across new regions efficiently, onboard customers compliantly, and scale your business without compromising speed or security.

Reach out to discover how Yapily can help you transform your business with open banking. Contact us today.