The news: Green Dot last Thursday reported Q3 2021 B2B services revenue of $118 million, over a third of its overall revenue. B2B services revenue was up 53% year over year, nearly three times the rate of the company’s top-line growth.
More on this: BaaS is so hot that it burns—and Green Dot is a beacon for the BaaS industry. The company white-labels its products and services for partners that rebrand them to offer to their customers, partners, and employees.
Strike while the iron’s hot: BaaS is already woven into everyday products from some fintech brands. Mega-neobank Chime’s checking account, debit card, and credit card, for example, are built on top of services offered by Stride Bank and the Bancorp Bank. And the BaaS space is getting crowded. Several neobanks that were once devoted to the customer-facing experience have recently unveiled or expanded their own platform offerings.
BaaS begets embedded banking: The banking customer experience is on the cusp of revolution as consumer brands elbow into financial services. Payments products are showing the way:
The big takeaway: Green Dot is the incumbent BaaS player, with a who’s who list of enterprise customers. But players like Railsbank, Marqeta, Clear Bank, and BankMobile are populating the space—many with a focus on enabling fintechs’ and tech startups’ banking services. Green Dot’s B2B revenue will ride the BaaS wave, but as niches fill, competitors grow, and BaaS offerings commoditize, by 2025 it will get squeezed.