UK-based Griffin Bank, founded by a former Silicon Valley engineer, is an API-driven banking-as-a-service platform that just received its banking license about a year after starting the application process. This gave the company the green light from UK financial services regulators the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) to emerge from 'mobilization' and launch as a fully operational bank. It means that it was given.
The move is in sharp contrast to Revolut, the UK's most valuable fintech company. Revolut has yet to receive a banking license, despite repeatedly announcing its intention over three years. (No doubt Revolut can take solace in the fact that, according to the PRA and FCA, only 28% of companies reached the submission stage between 2013 and 2019.)
Griffin says it now offers a full-stack platform for fintech companies to deliver banking, payments and wealth solutions through automated compliance and an integrated ledger. In fact, Griffin is unlikely to offer bank accounts directly to consumers, but rather to other businesses that need to offer built-in financial solutions such as savings accounts, custodial accounts, and accounts for holding customer funds. likely to provide.
Founders David Jarvis and Allen Rohner have a wealth of experience. Jarvis was an early engineer at Standard Treasury (acquired by Silicon Valley Bank in 2015) before joining Airbnb, where he worked in infrastructure. Mr. Lohner founded the software startup CircleCI. Along with his Jarvis, he is the author of his Learning ClojureScript, an introduction to his ClojureScript language, which Griffin uses to build systems.
They argue that it is important that the products offered by Griffin are technology-driven. The UK banking world has historically not been a particularly technology-friendly industry, but when open banking standards were forced on the ultra-traditional industry a few years ago, leading to the launch of a series of neobanks such as Starling, Everything has changed. , Monzo, Tide, etc.
But now that fintech companies are here to stay, these and other types of companies are leaning into what has come to be known as “embedded finance.” The benefits of incorporating financial products into existing services are becoming clearer. By bringing functionality together in one place, he increases customer lifetime value. Customer churn is also reduced for the same reason. And it creates a new revenue stream for companies that previously did not offer financial products.
Last year, banking-as-a-service was expected to grow 15% annually in the United States, reaching a valuation of nearly $66 billion by 2030. Among other companies entering the space, Treasury Prime secured his $40 in North America last year. They raised $1 million in Series C, Synctera raised $15 million, and Omnio raised $9.8 million. Other companies jumping on the banking-as-a-service bandwagon include M2P (India), Pomelo (Argentina), Cross River (US), and Solaris (Germany). And they are raising money.
Commenting on the next stage of Griffin's growth, co-founder David Jarvis told TechCrunch that Griffin customers will now be able to have their funds pooled with their “own bank” rather than the big banks. He said many banks have stopped offering this type of service. And the benefit of embedded finance and BaaS is not that consumers “end up owning 50 bank cards,” he says.
“We are focusing on the embedded finance part that synergizes with our advocacy. We have access to earned wages, so we are focusing on the payroll finance that we already have with our employees. We work with businesses. And they want to create, for example, embedded savings accounts. So they leverage their existing financial relationships and bundle additional financial services in a built-in way. . That makes sense. Do we want to help people issue their own branded cards? No.”
He said there is a lot of “historical confusion between core banking system vendors and banking as a service provider,” meaning BaaS is being confused with other companies. He said that
“When people talk about banking as a service, they tend to confuse actual banking with the many non-banking services that still meet the 'looks like a bank, smells like a bank' criteria. there is. But that's not the case. This is an area where whether we have banking licenses and neobanks that are not real banks suddenly becomes important. Because you can enable nested customers to actually earn interest on their funds. ”
He also noted that in addition to FCA-regulated companies, there is a wide range of companies that are not FCA-regulated but have some form of regulator or governing body that requires them to hold funds in a charged money account. Then he said. It’s a very big part of the real estate sector…people who are doing things with managed rentals, people who are doing things with tenant deposits. All of this must be kept in a specially marked bank account. ”
Mr. Griffin's goal is to pick up as much of that business as possible, he said.
Investors are betting that that objective will be achieved. After raising $28.1 million, Mr. Griffin raised an additional $24 million (19 million Pound) was raised. Last June, Griffin raised $13.5 million in a Series A round led by MassMutual Ventures. The organization has now raised approximately $52 million since its founding in 2017.