Why payments dominate banking-as-a-service as KYC demand surges

The market reached $4.4b in 2025 with compliance tools expanding rapidly across borders.

Payment processing remains the primary revenue driver in Asia-Pacific’s (APAC) banking-as-a-service (BAAS) market, accounting for 41.3% of the market in 2025.

This allows providers to offer competitive pricing on transactions whilst earning higher margins from additional services like currency conversion, according to Mordor Intelligence.

However, compliance automation is the fastest-growing segment. Demand for "Know Your Customer" (KYC) tools is rising at 25.4% annually as firms expand across borders. 

The overall BAAS market in APAC was valued at $4.4b in 2025, and the sector is projected to reach $5.3b this year. 

Industry analysts expect the market to grow to $12.31b by 2031, representing a compound annual growth rate (CAGR) of 18.6%.

Large companies currently dominate the market with a 54.60% share, primarily due to large-scale projects like digital bank launches and supply-chain financing. 

Despite this, small and medium-sized enterprises (SMEs) are the main engine for growth, expanding at a rate of 19.05%. 

Geographically, China remains the largest market, holding 31.85% of regional revenue in 2025. 

Whilst growth there is slowing due to stricter cybersecurity and data rules, major players like Ant Group are now exporting their technical expertise to other nations. 

India has emerged as the fastest-growing country with a 20.85% growth rate. This is fuelled by the high volume of United Payments Interface (UPI) transactions and government initiatives like the Jan Dhan Yojana. 

ICICI Bank has already generated $15m in fees through its platform of over 600 APIs, demonstrating how traditional banks are moving toward digital distribution to reach rural areas.