In the 15th century, the Medici family led the development of modern banking. Banking was slow, brick-and-mortar operations, costly, and required a high level of trust. Over time, the cost of accessing financial services has dropped dramatically. With blockchain technology, we clearly see the promise of round-the-clock, global, zero-cost banking.

No matter how advanced the financial infrastructure becomes, the need for banking will always be there. Banking-as-a-Service (BaaS) emerged because under the framework of the traditional financial system, it is difficult to build basic financial components, no matter how innovative the application layer is. Naturally, this enables modularity at the software level, resulting in a separation of front-end and back-end. Today, the back-end part is referred to as BaaS.

BaaS providers license their infrastructure to fintech companies, enabling businesses to launch digital banking, corporate credit cards, and lending products with minimal time and cost. Delivering these services through application programming interfaces (APIs), BaaS providers allow tech companies to focus on customer experience and unique offerings, while BaaS providers handle the "boring but critical" back-end stuff: compliance, risk management, and cash flow.

It is assumed that the BaaS system before the advent of blockchain included banking infrastructure, KYC/AML compliance, payment processing, card issuance, and data aggregation. While feasible, the system is complex and inefficient because it is still based on the traditional banking infrastructure established in the 70s of the 20th century (SWIFT/Automated Clearing House ACH), which is expensive, does not provide 24-hour service, is capital inefficient and does not have global availability.

Blockchain will disrupt modern BaaS because it represents a fundamental innovation. By using blockchain-based assets and protocols, we can build a new BaaS model that is simpler, cheaper, faster, global, and more transparent.