How Banking-as-a-Service Really Works: Lessons from Magnetiq Bank’s Turnaround
Jakub Więcław, Chairman of the Management Board of Magnetiq Bank, has lived through one of the most instructive journeys in European Banking-as-a-Service (BaaS) — from a near €300 million exit at Vodeno/Aion to turning Magnetiq Bank from a loss-making institution into a projected €2 million profit business in under 18 months. In a recent conversation with Evun, Global Head of Fintech Practice Group at Peterson Senate Partners, Jakub shared what actually drives success in embedded finance — and what kills it.
TL;DR / Quick Takeaways
– Regulatory trust is 75% of the BaaS success formula. Without a regulator that understands your model, no technology or pipeline can save you.
– Magnetiq Bank grew revenue by 444% year-over-year and flipped from €1 million in losses to a projected €2 million profit within 18 months of Jakub joining.
– The biggest scaling bottleneck is time-to-license and time-to-revenue — a new fintech client can take up to two years from account opening to generating meaningful income.
– Flat structures, daily profitability tracking, and radical pricing transparency are the operational decisions that made the difference.
What Does the Future of Banking Actually Look Like?
Former Barclays CEO Anthony Jenkins predicted that in the near future, banks as standalone brands will disappear — replaced by retailers, platforms, and service providers with embedded finance running invisibly in the background. Jakub agrees, with an important nuance.
Large pan-European banks with deep client relationships will survive for the next 20 to 25 years. But the growth opportunity belongs to BaaS providers like Magnetiq Bank, operating in a B2B model — delivering infrastructure to fintech companies who then serve end customers directly.
The generational shift is already visible. Jakub’s 14-year-old daughter doesn’t know whether she’s using Visa or Mastercard. She paid by phone. That human behavioral shift is reshaping the entire embedded finance landscape.
At the same time, regulatory complexity is increasing. Not every company wants to hold a full banking license, which means more fintechs will seek licensed partners to handle compliance, AML/KYC, and licensing obligations — freeing them to focus entirely on building the customer journey.
Large incumbent banks are largely blind to this opportunity. A CEO of a global institution asking about a €100–200 million market simply won’t see it. That gap is exactly where Magnetiq Bank operates.
Why Did Solaris Bank Struggle — and What Does It Mean for the Industry?
The BaaS sector has seen its share of collapses. Solaris Bank’s difficulties offer a direct lesson: an imbalanced relationship between risk appetite, sales expectations, and regulatory standing will eventually trigger intervention. In Solaris’s case, the German regulator ultimately required pre-approval on individual deals — a sign that the foundation of trust had eroded.
The lesson Jakub draws is clear:
– Full-service licensed banks that deliver a complete package will outlast technology-only or EMI-only providers
– Regulatory relationship quality is not a compliance checkbox — it is the single most important strategic asset in BaaS
– Fintech clients choose partners based on regulatory reputation first, then cost, then product capability
On Solaris’s announced pivot to an AI-centered model backed by Sumitomo Group’s investment: without BaFin’s acceptance of that model, the technology advantage is irrelevant. A regulator can stop any business, regardless of how sophisticated the product is. Jakub has seen it happen — a go-live blocked by a regulator two days before launch after 12 months of integration work.
How Did Magnetiq Bank Achieve 444% Revenue Growth in 18 Months?
The turnaround at Magnetiq Bank was not built on a single decision. It was built on a set of deliberate operational choices informed by years of watching what goes wrong.
What Jakub changed on arrival:
1. Replaced approximately 40 of 160 employees, bringing the team to 127 people with the right skills and energy
2. Dismantled hierarchical layers — directors, deputy directors, team leads — cutting the structure roughly in half. Everyone operates at the project level. Jakub himself is willing to act as product owner when needed
3. Introduced daily profitability tracking. Before his arrival, teams had no visibility into whether individual client relationships were profitable. Now, profitability is visible in real time — down to the current hour
4. Established transparent, straightforward pricing. Magnetiq Bank is not the cheapest option in the market. That is a deliberate choice, and it will not change
5. Built on the Signet Bank Group’s established regulatory and government relationships, using that reputation as a foundation rather than building from zero
The shift from €1 million in losses to a projected €2 million profit was the direct result of these combined changes — not a single product launch or market shift.
What Is Slowing Magnetiq Bank’s Scaling?
Despite strong momentum, two bottlenecks constrain the pace of growth.
Licensing timelines. A new fintech client opening an account today will typically need 12 months to receive their license, then a further 6 to 8 months before revenue from that relationship becomes meaningful. The total wait can reach two years. Compressing that timeline is a direct lever on growth velocity.
Delivery capacity. Magnetiq Bank can currently run five simultaneous projects across Europe. Doubling that to ten requires more skilled people — particularly at the IT and integration level — and that hiring takes time.
The pipeline itself is not the constraint. Satisfied clients generate referrals: a successful Lending-as-a-Service deployment in Germany for consumer loans produced five additional recommendations for the same solution in other markets. Client acquisition cost stays low because the product and the relationships do the selling.
How Is AI Actually Being Used — and Where Does Human Work Still Dominate?
The honest answer: AI is present, but not transformative yet in every area.
| Area | Current AI role |
|—|—|
| Client onboarding | AI analyzes data to support decisions |
| API preparation | AI accelerates customized API connection building |
| Document review | AI assists legal teams in document analysis |
| Acquiring data analysis | Under active development — thousands of daily transactions need faster processing |
| Regulatory negotiation | Fully human — no automation possible |
| Partner integrations | Fully human — customization requirements vary by market |
The embedded finance reality is that while payment APIs are broadly standardized, every new market introduces customization requirements. Over-customization has nearly derailed projects in the past. The balance between standardization and flexibility remains a live operational challenge.
What Does Leadership Actually Look Like in a BaaS Turnaround?
Jakub’s approach to leading Magnetiq Bank’s transformation reflects a philosophy built on self-awareness and structured pressure.
On organizational culture: flat structures produce better outcomes than hierarchies. In the Latvian market — which Jakub describes as naturally hierarchical — this required deliberate effort and direct cultural change. Equal accountability at the project level, with no large-scale gatekeeping roles, is the operating model.
On self-leadership: three years ago, Jakub began cycling. He now cycles before work, not after. The mental reset it creates — 20 minutes in which daily operational concerns disappear — gives him clarity that carries through the day. His first winter in Latvia, with four to five hours of daylight, tested that discipline. The routine held.
On feedback: Jakub actively seeks it, positive and negative, and adjusts behavior on a monthly basis. He acknowledges this openness can be excessive — but it is the source of continuous calibration.
On motivation: he prefers to chase leaders rather than be one. Being in first place creates comfort; being in pursuit creates drive. The pressure of competition — including well-resourced rivals like a Sumitomo-backed Solaris, if they solve their regulatory position — is a source of energy, not anxiety.
On retros: he dislikes the ritual, but runs them anyway. Retrospectives are needed when things go wrong and equally when things go right.
FAQ
What makes Magnetiq Bank different from other BaaS providers in Europe?
Magnetiq Bank holds a full Latvian banking license and operates under EU banking standards, which means clients can use Magnetiq Bank’s compliance infrastructure, AML/KYC processes, and licensing rather than building their own. This full-service model — combined with a strong regulatory relationship and backing from the Signet Bank Group — distinguishes it from technology-only or EMI-license providers.
How long does it take for a new fintech client to generate revenue for Magnetiq Bank?
Based on current experience, the realistic timeline is close to two years. A new client typically waits around 12 months to receive their license, followed by 6 to 8 months before the relationship produces meaningful revenue. Reducing this timeline is one of Magnetiq Bank’s primary growth levers.
Is Lending-as-a-Service (LaaS) already live?
Yes. Magnetiq Bank is currently active in the German consumer lending market, delivering Lending-as-a-Service to German consumers through fintech partners. The successful deployment has already generated five additional referrals for the same solution in other European markets.
Why did Magnetiq Bank choose to be more expensive rather than compete on price?
Pricing transparency and premium positioning are deliberate strategic choices. Fintech clients who choose Magnetiq Bank do so because of regulatory credibility, speed of deployment, and the quality of the partnership — not because it is the cheapest option. Competing on price would undermine the value proposition and attract clients whose priorities do not align with the bank’s model.
What is the biggest risk for BaaS providers expanding across Europe?
Regulatory relationships. A regulator can block a go-live two days before launch after 12 months of integration work — Jakub has seen it happen. No amount of technology, investment, or sales pipeline compensates for a weak or adversarial relationship with the relevant financial authority. Building that trust, country by country, is the foundational work that precedes everything else.
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Jakub Więcław Turns Magnetiq Bank Around Fast
