Fintech Lands UK Banking License with restrictions

• The British fintech startup Griffin has secured a banking license after a year-long process.
• The Prudential Regulation Authority (PRA) has approved the start-up, subject to restrictions.
• Griffin has raised $28.2 million to date and is likely to bring in investors again this year.

Banking-as-a-service startup Griffin has become the latest fintech to be granted a restricted UK banking license after a year-long process.

Founded in 2017 by ex-Airbnb software engineer David Jarvis and CircleCI founder Allen Rohner, the London-based company helps businesses skip the slow process of finding a banking partner and get straight to launching products.

Griffin has developed an API for both financial institutions and other fintechs that enables them to open restricted accounts with a less record-heavy compliance structure. The start-up is now in what is called mobilization after being approved by the Prudential Regulation Authority (PRA), which means it can operate as a bank, subject to restrictions.

The company is also on the Financial Conduct Authority’s (FCA) register after years of trying to gain approval from UK regulators to offer its banking services.

The aggregate amount of deposits held by Griffin cannot exceed £50,000 at any one time, subject to FCA restrictions relating to its authorisation. Similarly, the aggregate value of payment services provided by the startup must not exceed £1,000 unless they are exclusively limited to “test activity” and Griffin has secured prior written consent from the PRA.

“It’s been a three-and-a-half-year journey and there’s still a lot of work to be done,” Griffin CEO Jarvis told Insider. “We can now actually test products with customers and we can be much more profitable as a business, despite the macroeconomic environment.”

Securing a UK banking license is no mean feat. Only 28% of companies that held meetings with the UK’s two main financial regulators, the Prudential Regulation Authority (PRA) and the FCA, reached the application stage between 2013 and 2019, according to data from the Bank of England.

The process of getting the license was a long but “largely positive experience,” Jarvis added. Neobanks such as Revolut, founded in 2015, have yet to get a UK banking license with strict processes in place, and Jarvis suggests the application process is not something “you can just throw money at.”

The FCA had been repeatedly criticized for its burdensome pace, but the agency has been understaffed and overwhelmed in recent years with a surge in applications and the burden of Brexit weighing heavily on the regulator.

“We heard it all the time during the process that it can take a long time to turn things around, but they literally don’t have the people. If you want a world-class regulator, you have to fund it,” Jarvis said. “Fintech is one of the crown jewels of the UK economy, so it’s a bit surprising how little actual support it gets.”

Griffin has raised $28.2 million to date, including a $15.5 million raise in July 2022. It counts GoCardless and Currencycloud investor Notion Capital among its backers, as well as Swedish firm EQT Ventures.

Following Griffin’s authorization, the company will push ahead with its growth plans in embedded finance, and Jarvis said the startup will likely look to raise funding again before the end of the year.