Banking-as-a-service.

In plain English

Banking-as-a-service is an arrangement where a chartered bank supplies the regulated backbone, meaning deposit accounts, card issuing, payment rails, and compliance, while a partner company supplies the app and the brand. A middleware provider often sits in between handling the technical connection. The deposits legally sit at the chartered bank, which stays responsible to regulators for compliance, anti-money-laundering controls, and safeguarding customer funds. Regulators have pressed banks to prove they can supervise these partnerships, including keeping accurate records of which customer owns which balance.

01Why it matters

The app on your phone may not be the bank holding your money, so knowing which chartered institution stands behind an account tells you where deposit insurance attaches and who is accountable when the records disagree.

02The math, step by step

Say a retail brand launches a checking account. Customers see the brand's app, but the money sits at a partner bank and insurance attaches there. If you already hold a large balance at that same partner bank directly, your combined total at one institution may pass the per-depositor insurance limit without you realizing the two are the same bank.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT

04Receipts

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