British banking-as-a-service (BaaS) platform Griffin is now officially a bank.
The company announced Sunday (March 10) that it had received a banking license after getting approval from U.K. regulators, making it the first BaaS platform in the country to do so.
The launch is backed by a $24 million funding round led by MassMutual Ventures, NordicNinja and Breega, with participation from existing investors Notion Capital and EQT Ventures, the company said in a blog entry.
“Our continued support for Griffin is a testament to its extraordinary progress to date,” said Ryan Collins, managing partner at MassMutual Ventures. “As the U.K.’s first full-stack BaaS platform with a banking license, Griffin is the partner of choice for FinTechs and brands to build innovative financial products with a seamless client experience.”
Per the blog post, Griffin’s full-stack platform is designed for “technology-driven firms” that want to offer clients banking, payments, and wealth solutions. The company says its automated compliance technology and integrated ledger allow businesses to streamline their financial operations while continuing to serve customers.
PYMNTS on Monday (March 11) examined the way BaaS lets nonbanking entities provide financial services and open new revenue opportunities for traditional banks that need new technological capabilities, but also present more risks.
“Application programming interfaces (APIs) are the gateways, so to speak, of the data-sharing efforts between banks and digital upstarts,” that report said. “And APIs are key to the rise of open banking, where consumer-permissioned data sharing can give rise to new use cases within financial services.”
However, recent research by PYMNTS Intelligence shows that nearly half of financial institutions (FIs) have said that the risks of open banking outweigh the advantages.
“BaaS is part of open banking, as banks open up their APIs and connect to third parties as the latter seek to innovate,” that report said.
And the data shows that just 25% of banks surveyed said that BaaS could add some top-line momentum, while less than 10% of FIs, as recently as last year, were in the process of developing such services.
“There are some headwinds in place. In recent months, and as documented by several sites and companies, the rise of attacks on APIs has been notable,” PYMNTS added. “In one example, Check Point has estimated that in the first month of this year alone, attacks on APIs were up 20% year on year.”
