What is Lending as a Service?
Lending as a Service (LaaS) is a model where a third-party provider handles the infrastructure and compliance of a lending product — allowing a non-bank platform to deploy credit to its users without building a lending operation from scratch.
The term is used loosely in the market and covers at least four distinct models:
1. Balance-sheet LaaS (single lender)
The provider (e.g. YouLend, Liberis, Capify) maintains their own lending book. They underwrite and fund deals from their balance sheet. The platform is a distribution channel.
Characteristics: single product type, single credit appetite, approval rate limited by one lender’s risk parameters, NIM share revenue model.
2. Broker-as-a-Service / multi-lender LaaS
The provider (e.g. Fundably) is a regulated credit broker connecting applicants to multiple lenders. The platform embeds the broker’s application flow. Multiple lenders compete for each deal.
Characteristics: multi-product, multi-lender, higher approval rates, revenue share model.
3. BaaS-enabled lending
Banking-as-a-Service providers (e.g. ClearBank, Modulr, Railsbank) provide ledger, accounts, and payments infrastructure. Platforms use this to construct lending products — but the platform must arrange their own lender capital or balance-sheet partner.
More complex, more regulatory overhead, primarily relevant to fintechs building their own lending product from the ground up.
4. Programme lending
A credit fund, challenger bank, or traditional bank provides capital under a portfolio arrangement. The platform originates deals; the capital provider funds them. The platform takes a margin or origination fee.
Higher revenue potential but significant regulatory and operational complexity. Effectively running a lending operation.
Which model fits most platforms?
For the majority of UK B2B platforms evaluating embedded lending, model 2 (broker-as-a-service) is the most practical starting point:
| Criteria | Balance-sheet LaaS | Broker-as-a-Service | BaaS lending | Programme lending |
|---|---|---|---|---|
| Time to live | Weeks | Days | Months | Months–years |
| Regulatory burden | Low–medium | Low | High | High |
| Revenue per deal | Medium | High (up to 30%) | High | Highest |
| Approval rate (mixed users) | 20–35% | 60–70% | Depends | Depends |
| Engineering complexity | Medium | Low–medium | High | High |
| Product breadth | Single | 8+ types | Custom | Custom |
Broker-as-a-service offers the fastest time to market, the lowest regulatory overhead, and the highest approval rates for a mixed SME user base. The trade-off is that the platform does not control the underwriting or lender relationships.
The Fundably LaaS model
Fundably operates as a broker-as-a-service / multi-lender LaaS provider:
- FCA authorised credit broker
- 50+ lenders across SME product types
- Integration via REST API, React component, or iFrame
- Up to 30% revenue share per funded deal
- Zero setup fees, zero monthly costs
- White-label with full brand customisation
For platforms — especially those considering a balance-sheet lender LaaS as their first integration — the multi-lender broker model deserves serious comparison on total revenue per user, approval rate, and time to market.