How BaaS Can Open New Revenue Streams for Banks | Tuum, Zenus Bank and LHV | The Fintech Show #149

In the latest episode of The Fintech Show, Rivo Uibo from Tuum, Gabriel Viera from Zenus Bank, and Daniel Rowlands from LHV Bank discuss the evolution of Banking-as-a-Service (BaaS), and the revenue generating possibilities it presents. As the space matures, priorities are changing. Seamless onboarding is one major goal but compliance is also key.  Watch the episode to find out about:

• Open APIs are presenting very real opportunities to scale.
• How Zenus Bank are enabling LATAM super apps to offer U.S. banking services.
• The challenges facing Open Banking growth?

The Evolution of Banking-as-a-Service (BaaS)

The BaaS market has matured. For one, it is growing. It was valued at $15.9 billion in 2023 and is expected to expand to $64.7 billion by 2032. Commenting on the demand for this technology, Tuum co-founder Uibo suggests that banks are now under pressure to stay relevant in an increasingly competitive landscape, seeking new revenue streams while leveraging their existing infrastructure. 

Initially, many BaaS providers targeted fintechs with relatively simple offerings but as the market evolves, compliance and economic viability have become critical focus areas. Now, successful players in this space, like LHV and Zenus, are focusing on solving real problems and delivering high-value integrations to their specific customer segments.

Rowlands from LHV, builds on this by emphasizing the importance of seamless onboarding for scaling operations. Efficient KYC (Know Your Customer) and KYB (Know Your Business) processes allow fintechs to expand quickly across multiple jurisdictions without administrative bottlenecks. LHV, who saw significant growth in 2023 and 2024, embraces an open approach and its APIs are publicly available to ensure transparency and ease of integration. Rowlands believes that fostering collaboration in this way is essential for driving industry progress.

Viera, who is Chief Compliance Officer at Zenus, provides a real-world example of how their offering enhances customer engagement while expanding market reach. Super apps in Latin America, for instance, can now offer U.S. banking services directly to their users, creating a frictionless experience. Zenus’ approach allows for deep customization via APIs, ensuring a tailored and branded user experience.

The Role of Technology in Scaling Modern Banking

Modern banking platforms need cloud-native, API-first architectures, Uibo says. By leveraging microservices and asynchronous processing, institutions can achieve the scalability required to support high transaction volumes while maintaining 24/7 availability. These technological advancements ensure that BaaS providers can meet growing customer demands without compromising reliability.

Viera also explains how Zenus Bank has strategically evolved from a digital bank into a flexible platform supporting diverse business models. By offering embedded banking solutions, Zenus differentiates itself and gains access to new demographics, particularly in international markets. Through strong B2B relationships, the bank can extend its services beyond traditional banking, making financial services more accessible across various industries.

Rowlands shares LHV’s journey in open banking, highlighting its well-established presence in Estonia, where LHV powers payments infrastructure across physical and digital channels. Now, the bank is bringing this expertise to the UK, launching a retail bank and providing payment initiation services to fintech clients who want to generate revenue this way. There are challenges to commercializing open banking however. Many providers struggle with compressed margins and fierce competition. The way forward, he argues, is moving beyond basic transaction services and solving more complex problems like fraud prevention and payment orchestration—areas where businesses are willing to pay for real value.

Tuum’s Unique Advantage in Banking Infrastructure

Uibo positions Tuum as a company with a deep-rooted understanding of banking infrastructure, shaped by decades of experience. It’s certainly true that they have consistently pushed technological boundaries, from building real-time transactional core banking systems in the early 2000s to developing microservices-ba