Lunar launches standalone BaaS business and says it can rival bank revenues

Danish challenger bank Lunar is the latest bank to hive off its Banking-as-a-Service (BaaS) business as a separate entity- and claims its revenues can rival that of its core bank.

Lunar, which has over 950,000 customers across the Nordics and was last valued at around $2.2 billion, is calling its new BaaS entity Moonrise.

The Danish challenger bank is looking to tap into the growing European BaaS market, which is estimated to reach €100bn by 2030.

Banks launching BaaS and Software-as-a-Service (SaaS) offerings are growing in popularity.

In the UK, traditional banks HSBC and NatWest offer these white-label services as does challenger bank Starling, whose SaaS offering Engine became a subsidiary of the bank in 2022.

Lunar has been running its BaaS business since 2023, with clients including open banking outfit TrueLayer and Visa-owned CurrencyCloud.

But Lunar has now decided to launch it as a separate entity to better focus resources and allow it to stand on its own feet.

The new unit will target international challenger banks, fintechs and enterprise clients.

Ken Villum Klausen, CEO and founder of Lunar, said:

“Moonrise marks a pivotal moment in our journey.

“By taking the first step towards a dedicated focus through a separate entity, we can sharpen our focus on enterprise payments, scale faster, and ensure both Moonrise and our retail banking arm thrive independently."

Lunar said that Moonrise, which will have its own P&L, could generate revenues rivalling its core retail bank business over time.

A spokesperson for Lunar said: 

"Moonrise has the opportunity to grow substantially and contribute meaningfully to Lunar’s overall performance. While it’s early to predict exact figures, the scale and demand for enterprise payments in the Nordics suggest that Moonrise could, over time, rival Lunar’s retail banking revenue.”