Digital challenger bank Griffin has become the latest London-based fintech to secure a UK banking licence.
Following authorisation with restrictions from the Prudential Regulation Authority (PRA), Griffin is now the UK’s newest bank, licensed to hold up to £50,000 in deposits.
The much sought-after licence leaves the company poised to encroach on big banks’ hometurf by offering businesses a comprehensive Banking as a Service (BaaS) platform.
BaaS allows businesses to integrate banking services into their own offerings without having to set themselves up as banks. A housebuilder could, for example, offer loans to buyers using BaaS without needing its own banking licence.
Speaking exclusively to City A.M., co-founder and CEO of Griffin, David Jarvis, said the “huge milestone” meant Griffin could allow businesses to seamlessly integrate banking into their operations without relying on big banks’ systems “built around a mainframe from the 1960s”.
It was “crazy” that there were not more BaaS platforms, he said, “because every fintech in the UK needs a banking partner.”
The PRA and Financial Conduct Authority still need to approve Griffin’s full banking licence before the company can handle unlimited transactions.
Revolut, the UK’s most valuable fintech, has still not secured any banking licence after trying for the past two years.
Jarvis told City A.M. that Griffin’s relatively swift progress reflected regulators’ confidence in the company’s governance structures.
“From the beginning we had an independent board full of people who are really credible. At a cultural and philosophical level we really leaned into the regulation”, he said.
Jarvis expects Griffin to attain a full banking licence within nine months.
Asked how long the company could survive if this took longer than expected, Jarvis said “our pockets are deep enough for now”, adding that the company would announce the results of a new funding round “soon”.