March 29, 2023 Customer Persona

Who’s Buying Banking as a Service? The Ultimate Guide to Finding Your Perfect BaaS Customer: ICP Study

Who’s buying Banking as a Service? 

I snooped on six top Banking as a Service technology providers, found their customers, studied them, and built an Ideal Customer Profile (ICP) snoop report. The report focuses on data that would help salespeople find similar companies.

(Skip this if you already know what BaaS is all about)

For the uninitiated, a simple way to think of Banking as a Service (BaaS) is as a model that allows licensed financial institutions (banks) to offer their services to third parties who resell them to end-users.

These services include payments, account opening, and cards, all the way to running a full-on online bank without having to be licensed as a bank.

Banking as a Service has three layers:

• Banks
• Companies not licensed as financial institutions but want to offer financial services
• Banking as a Service (BaaS) technology providers connecting banks to the companies

We studied the last group.

If you want to skip to a specific part, below is a summary of what we uncovered:

BaaS buyers; how big are they?

Out of the 112 companies analysed, the majority (39.3%) have 11 to 50 employees, followed by a 24.1% tie between companies in the 51 to 200 employee range and early-stage startups with 1 to 10 employees.

The 3.6% of companies classified as unknown in the chart above most likely fall within the 1 to 10-employee early-stage companies. I say this because I noticed that most of the companies in this group have a thin online presence, which is a characteristic of new companies.

BaaS seems to be popular among smaller companies because it enables them to launch products quickly without having to go through the rigours of seeking licensing as a financial institution.

This is the main appeal of BaaS to this group of adopters, and if you’re looking to prospect them, it might make sense to find partners in ecosystems where early-stage financial services/fintech founders spend time. This includes accelerators, investor networks, founder communities, etc.

On the other hand, larger companies are a minority among Banking as a Service adopters in this study.

Companies with 201 to 500 employees make up 6.3% of our sample size, while those with 501 to 1000 employees add up to 3.6% of BaaS customers. Any BaaS provider prospecting this group should have in mind that larger companies probably already have existing relationships with banks or BaaS partners, especially if financial services are their core business.

However, larger companies in non-financial/fintech industries are still an unexplored opportunity, especially when there is a business case for embedding financial products into the existing offering to increase revenue or decrease costs. 

The data we explore next paints this picture more clearly.

Banking as a Service adoption across industries

58% of the companies studied are in financial services. They range from expense management, remittance, and peer-to-peer payments, to lending, investments, and segment-focused digital banks (or as Dharmesh Mistry puts it, experience-driven banks that focus on serving niches such as banking for landlords).

If you’re prospecting this group, chances are high that anyone who is already offering financial services has an existing BaaS partner.

I wonder how workable it would be to try selling your solution to a company that’s already using BaaS. Of the 112 companies I studied, only one seemed to have switched BaaS partners; most of them appear to be sticking with one.

With this in mind, non-financial companies adopting BaaS excite me more because, from an outbound point of view, it’s easier to find one who’s yet to explore BaaS and wiggle embedded finance in front of their nose than it is to find a financial services company without existing bank/BaaS partners.

But I could be wrong about this. 

So if anyone with a contrary opinion is reading, please share it. Have you had success finding financial services companies that are yet to solve the problem your BaaS solution solves?

The non-financial services industries adopting BaaS the most include software development (13.4%), technology, information and internet (6.3%), real estate (3.6%), transportation, logistics, supply chain and storage (0.9%), consumer services (1.8%), business consulting and services (0.9%), spectator sports (0.9%), airlines, and aviation (0.9%).

Use these LinkedIn industry codes to sharpen your Sales Navigator search.

Voice of customer data: how do you identify potential BaaS buyers

This section came from the frustration of seeing how the industry classifications above, did not really tell the true story when compared to how these companies described themselves on their websites and LinkedIn descriptions.

In this context, voice of customer data refers to the keywords and phrases that companies use to describe their niche, category, or value proposition. This information is valuable when building your outreach list and trying to find similar companies. If you’ve ever struggled with a Sales Navigator search that yielded unworkable results, you know why this data can be helpful.

How can you use these insights to prospect potential BaaS customers

Here's where you stop reading and type these keywords into your favourite leads database (Sales Nav, Crunchbase, Apollo...) to see what comes up.

Alternatively, if it's a niche that does not use LinkedIn as much, you can use the search engine results page on Google to find companies that resemble those in your ICP. This is how I would use the ICP keywords to expand the number of companies in the construction niche. 

Let's take Buildertrend, for example. These are the keywords that identify companies in their niche. 

"Construction project management app/software" seems to be a descriptive keyword that companies in this category would use. 

Write it down somewhere.

I then went to their website and noticed that Buildertrend is a construction SaaS, and like many SaaS companies out there, they have a pricing page that probably resembles other construction SaaS companies.

Call that characteristic 2.

I combined these two observations and came up with the following Google search commands to find similar companies.

"construction" project management app|software inurl:pricing -G2 AND -capterra AND -trustradius

This tells Google to bring up pricing pages of construction project management apps/software and remove all results from software review sites like Capterra.

The screenshot below shows what came up; many of these companies are in the same category as Buildertrend—which also appeared in the search. Take a look at the search results page.

Put some automation behind that and you build yourself a list of construction software companies that would likely be interested in exploring BaaS, in the same way Buildertrend has.