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UK BaaS Griffin Seeks Authorisation To Become a Bank With the FCA and PRA

The UK-based banking-as-a-service (BaaS) fintech Griffin has submitted its application to the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) whilst it completes its application for a banking licence.

“This is a major milestone for the company and a direct result of the team’s hard work and thoughtful approach to building a sound internal structure, strong business model, and reliable technology platform,” John Weguelin, Griffin chair, “I and the Board are thrilled to support the team on its journey to seeking authorisation to become a bank.”

Griffin’s BaaS platform is designed to provide fintechs of all sizes with a way of bringing their products to market, including access to the UK’s payment rails, bank accounts, debit cards, an integrated ledger and customer onboarding automation.

The process for applying for a banking licence requires companies like Griffin to demonstrate that they meet key regulatory requirements and expectations, including effective governance arrangements, a viable and sustainable business model, adequate capital and liquidity and safe and secure infrastructure and operations.

Few firms seeking authorisation reach this stage: only 28 per cent of companies that held initial meetings with the regulators reached the application submission stage between 2013 and September 2019, according to the PRA and the FCA.

The road to becoming the de facto banking platform for fintech innovation

Modern consumers demand digital-first finance, creating a massive opportunity with the embedded finance market likely to reach $7.2trillion by 2030, according to a report by Informa.

However, the process for building and launching financial services software is still long, expensive and built on outdated technology. Today, fintechs are forced to integrate disparate platforms across multiple partners with long onboarding times – stifling innovation and prolonging time to market.

David Jarvis, CEO and co-founder of Griffin
David Jarvis

“From the beginning, we’ve known that a full-stack approach delivers more value to customers,” said David Jarvis, CEO and co-founder of Griffin.

“Our platform brings historically siloed infrastructure components that all share a data model into a single platform, allowing fintechs to launch quickly without compromising on compliance or operational resilience.”

Enabling embedded finance with a developer-friendly, self-service approach

“Today, banks are not well equipped to support the seamless and contextual experience consumers have come to expect,” Tom Mendoza, EQT Ventures partner and investment advisor, said. “There is currently a gap in the market for a developer-led, full-stack approach to technology and banking. Griffin represents the future when it comes to powering the next generation of fintech and embedded finance.”

The company aims to bring software, pricing transparency and an API-first approach to the UK financial services sector. Additionally, Griffin’s BaaS platform will provide the power of SaaS technology and modern developer tools to the next generation of UK fintechs.

“Griffin’s platform enables fintechs to focus on what they do best—creating innovative products and experiences—not managing back-end infrastructure and compliance processes” Amy Kirk, independent non-executive director at Griffin and current board member of Monzo and FCMB UK said. “Submitting this application brings the company one step closer to actualising its ambitious vision.”

Regtech refinement and banking bureaucracy

In order for the documents to be submitted to the PRA and FCA for licensing, they must be approved by management-level and board-level committees, which means policies are constantly being iterated on in response to comments from board members and executives.

The full application pack consists of over one hundred documents, including policies, terms of references, plans, procedures and assessments. Some key documents, such as the company’s regulatory business plan and its liquidity and capital assessments, are hundreds of pages long and require exceptional attention to detail.

These documents also require input from multiple authors and approvers across different areas of the business, including finance, risk, compliance, engineering, product and commercial operations. Once the drafting stage is complete, all documents require at least two rounds of review and challenge, before final approval.

Rupert Whitten, chief operating officer at Griffin
Rupert Whitten

“All of the materials we submit must go through a precise governance process,” Rupert Whitten, chief operating officer at Griffin said. “The regulators require applicants to demonstrate there has been a robust challenge throughout the entire drafting process.”

To ensure that it was able to adhere properly to every requirement of the process, Griffin sought to leverage the compliance technology of Clausematch, which it used to draft and review all the documentation it submitted with its application.

This is a critical proof-point for the adoption of regtech software for the efficient approach to bank licensing for modern fintech companies

Having individual comment trails attributed to each paragraph was something that Griffin said made it easier to address the changes as each document passed through review. Clausematch’s regtech created a detailed record of each change made and why.

“In particular, the versioning function is very useful. It provides a complete history of the document in the document itself,” Whitten continues. “All the different versions are at the same link, in the same folder, and you know everyone is working on the correct material – it’s hugely helpful.”

Griffin officially submitted its bank authorisation application on 12 May, but the journey isn’t over yet. The BaaS fintech must continue to submit documentation and work with regulators to ensure that it’s in the best position to serve its customers well when and if its application to become a fully regulated bank is approved.

Author

  • Tyler is a fintech journalist with specific interests in online banking and emerging AI technologies. He began his career writing with a plethora of national and international publications.

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