Six months after regulation, BaaS faces a maturity test

Central Bank regulation marked a turning point for Brazil’s Banking as a Service (BaaS) market. More than a regulatory update, it repositions the sector, which is leaving a more flexible environment to operate with greater structure, clearer roles and higher operational demands.

After the first months since the rules were published, the market is experiencing an adaptation period that goes beyond regulatory compliance. What is underway is the transition from an expanding sector to a more mature, structured and professional industry.

BaaS played a decisive role in the expansion of digital wallets, fintechs and financial inclusion. The model allowed companies across various segments to incorporate accounts, payments, credit and other financial services into their digital journeys without building a regulated institution. Now the challenge is ensuring that this innovation continues within a structure of clearly defined responsibilities.

Much of the recent discussion concerns precisely the redistribution of these responsibilities between service providers and recipients. In many cases, activities such as customer onboarding, document validation, risk monitoring and customer service were performed almost entirely by recipients. The new regulation reinforces that certain obligations cannot simply be transferred. The regulated institution remains responsible for knowing its customers, monitoring risks, preventing fraud and complying with the requirements associated with its license.

In practice, this requires operational adjustments far beyond contract reviews. Processes must be redesigned, systems integrated and costs redistributed. Questions previously handled informally now require clear definitions: who performs onboarding checks, who bears their costs, how to handle customers rejected by the providing institution’s controls and how user support should work. These questions have no universal answers, which explains why the sector is still adapting.

At the same time, regulation produces another important effect: organizing the market. For years, different models coexisted under the same BaaS label. Some institutions provided regulated services, some companies supplied technological infrastructure and some organizations acted as commercial intermediaries. The new regulatory structure tends to separate these roles more clearly.

This does not mean less competition. What we see is a trend toward specialization. Regulated institutions more explicitly assume their role as financial service providers, while technology companies strengthen their positioning as infrastructure and integration suppliers.

Although the number of providers may consolidate in the coming years, the universe of recipients is likely to keep growing. More companies realize that having their own regulatory license is not always the most efficient alternative. Capital costs and governance, audit and compliance requirements rise as the financial system becomes more sophisticated. For organizations whose core business is not financial, operating through a specialized partner is usually more advantageous.

This movement helps explain declining interest among new companies in seeking their own Central Bank licenses. Instead, demand is growing for models that allow financial products to be launched using infrastructure that is already regulated and operational.

The result is an environment that continues encouraging innovation and competition. It is often service recipients that develop specialized solutions for different economic segments. Applications focused on mobility, retail, agribusiness, education and business management continue finding in BaaS an efficient way to incorporate financial services into their value propositions.

Brazil’s Banking as a Service market is maturing, and its growth is coming to depend not only on speed, but also on governance, transparency and responsibility.

📌 Originally published in Finsiders Brasil