The financial services industry is at a critical turning point. APIs are now driving 40% of revenue growth in financial institutions across the globe by enabling cross-platform integrations and personalised services. This shift is powering an era where banks and financial institutions can build and scale financial products faster than ever before.
In MENAP, the urgency is even greater. SMEs receive only 7% of total bank lending in the region, despite contributing to 60% GDP in some markets. At the same time, banks waste 70% of their IT budgets on legacy tech, leaving little room for innovation. Consumers, meanwhile, are demanding digital-first solutions, with 86% of banking customers in Saudi Arabia preferring app-based financial products.
BaaS sits at the intersection of all these pressures: enabling banks and financial institutions to launch compliant products faster and scale cost-effectively. Yet despite the momentum, myths about BaaS still create hesitation, slowing down banks, and that could be leading the next wave of growth.
The key to effectively using BaaS is to identify what it can do for your bank, making it your biggest enabler. Let’s break down the myths and uncover the reality of what BaaS can deliver across MENAP.But change is coming – and it’s coming fast.
Myth 1: BaaS is just core banking + card processor
While card issuing is sometimes the entry point, modern BaaS infrastructure is far more comprehensive. It covers issuing, payments, lending, compliance, and APIs, all on one platform. BaaS enables banks to design, test, and scale entirely new financial products without tearing apart their core infrastructure.
For banks and FIs in MENAP, this distinction is crucial. A region where regulators require strict compliance, consumers expect speed, and SMEs need smoother financing, a simple processor cannot serve all demands. With BaaS, institutions can not only move transactions, but also scale and grow revenue. Cross-border transactions in the region face similar challenges. Fees across some corridors are still over 5% and settlement takes between 1 to 3 days, much higher than consumer rates. For the region’s highly interconnected trade, this inefficiency poses numerous challenges for businesses.
Myth 2: BaaS is just another integration layer
BaaS isn’t simply about adding a few banking features on top of existing systems. It’s a full infrastructure that enables banks and financial institutions to deliver products like cards, wallets, payments, and lending through APIs.
With BaaS, banks and FIs can integrate full-fledged banking features into their platforms.. They can issue cards, provide digital wallets, enable instant payments, and facilitate lending, all while ensuring regulatory compliance, and without building the infrastructure from scratch.
Myth 3: BaaS bypasses regulations
One common myth is that BaaS somehow avoids regulations. The reality is the exact opposite. BaaS relies on the bank’s existing compliance and regulatory requirements, but enables them to operate through a modern, API-driven architecture. Instead of weakening oversight, it digitizes and strengthens it.
This means that KYC/KYB, AML screening and transaction monitoring are no longer slow, manual processes. They become automated, real-time, and fully auditable. For banks, this is a critical shift: they don’t just remain compliant, they can now scale faster, launch new products confidently, and respond to regulators with data-rich transparency.
Myth 4: BaaS replaces banks
Another common myth is that BaaS is a threat to banks. In reality, BaaS lets banks innovate faster, while still complying with regulatory requirements. By outsourcing infrastructure, banks can launch new products faster, reduce costs, all while meeting customer expectations.
In Saudi Arabia, this is especially urgent. With 79% of retail payments already digital, customers in the kingdom expect modern banking experiences. But legacy systems and high infrastructure costs hold banks back from modernisation. BaaS enables them to modernize without ripping out the core.
Myth 5: BaaS is only about payments
Payments are often the entry point, but modern BaaS platforms are modular and support a range of use cases such as Buy Now, Pay Later (BNPL), wallets, corporate cards, and lending products. This flexibility is particularly important in MENAP, where customer and corporate needs vary widely from market to market.
BNPL, for example, is booming in GCC, while SME financing is a bigger priority in Egypt, where the government is keen on improving SME access to credit. A narrow, payments-only BaaS platform limits a bank’s ability to adapt to these shifts.
Myth 6: BaaS only has B2C applications
Consumer apps may seem a larger focus, but BaaS is equally useful while serving SMEs and corporates. Businesses need full-fledged digital tools to manage spend, pay suppliers, and access credit, all areas that BaaS supports.
With MENAP’s SMEs heavily underserved by traditional banking models, banks that support this unlock massive opportunities. By offering digital-first payment solutions, faster onboarding, and embedded credit access, banks can position themselves as growth partners to the region’s businesses.
Myth 7: BaaS is costly
The assumption that BaaS is costly comes from comparing it to legacy systems, which require heavy upfront capex, multi-year integration timelines, and continuous maintenance. BaaS, in fact, flips this, letting banks use a pay-as-you-go model, where they only pay for what they use.
This not only reduces cost, but also cuts time to market from years to weeks. And in MENAP, where banks are racing to digitise faster, spending years and millions on infrastructure is simply not an option.
BaaS: powering MENAP’s next financial chapter
BaaS represents a crucial chapter in MENAP’s financial sector, reshaping how financial products are delivered to customers in the region. It allows banks to modernise without rewriting their core infrastructure, to comply with regulatory requirements, reduce costs, and also reach untapped SME markets.
At NymCard, we are powering this shift. With our API-driven infrastructure comprising issuing, payments, and lending, banks and financial institutions can innovate and scale faster while remaining compliant. By removing the complexity of legacy systems, we enable banks to focus on what matters most: building the next generation of financial services for MENAP.
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