“We’ve built a purpose-built bank just for fintechs”

At the FinTech Talents Festival in London last week, FinTech Futures sat down for a chat with Adam Moulson, chief commercial officer at Griffin.

Griffin is an aspiring bank for fintechs, founded in 2018 and headquartered in London, UK. Moulson himself joined the start-up around two years ago. Prior to Griffin, he co-founded paytech service Form3 and spent nearly 12 years in various roles at Swift.

In this discussion, he shares with FinTech Futures how Griffin’s banking licence authorisation is coming along, what sets Griffin apart from other banks and the company’s plans moving forward.

FinTech Futures: Tell us a bit about Griffin and how you came to join the start-up?

Adam Moulson: Griffin is a new bank that we’re building in the UK, we’re [in the process of] obtaining a full UK banking licence. Our purpose is to serve fintechs and help make their businesses more interesting, more viable.

Every fintech that provides financial services and regulated products has to be regulated themselves. They have to work with a bank. And so we’ve built a purpose-built bank just for fintechs. We want to make the bank as easy as possible for fintechs to work with, both from a technology perspective and a business model perspective.

The company was built about four years ago. The first two years was a lot of research into the market and the customer need and looking at what the other providers offer, and trying to come up with a value proposition that was going to be meaningful.

I joined after those two years of research and have been working on this ever since. It’s quite complicated to build a bank and takes a lot of time, a lot of thought, a lot of effort and a lot of money. We are at the point where we’re not yet regulated as a bank, but we are expecting and hoping that to happen in the coming months.

How has the banking licence application process been? 

As a process, it’s really interesting, because like any business should, you have to build a really interesting business model that solves a real problem in the market. You have to do that in a way that creates a sustainable business.

What’s really interesting about going through the banking authorisation process is, it requires you to go into a lot of depth to think that through, and if you think about it, a regulator doesn’t want new banks in the market if they haven’t properly thought through and imagined all of these different things that can go right and wrong.

Because of the nature of it, there’s no specific timeline that you work towards. There is no date that it has to happen by. So, it’s very much a collaborative process between ourselves and the regulators, until we’re both comfortable that this is something that we’re able to do and can execute at low risk. And at that point, we hopefully should get issued our licence.

Are you currently operating with a restricted banking licence?

No, actually, we haven’t even got to that point. The next stage that we will go into is that we’ll get issued a licence but operate with restrictions. And then we’ll operate on that basis for a number of months, after which we’ll exit that period and be fully operational.

Again, it’s a really interesting process you have to go through to demonstrate that everything works well. You don’t want to go into a market and then introduce risk, you actually want to reduce risk and manage risk. What we have done in the life of the company is we built some technology products that are part of the bank, and we’ve made some of those technology products available to the market.

For example, one of the biggest challenges that banks and fintechs handle is managing risk and financial crime. The way Griffin is going to solve that problem is we make financial crime and risk management a core part of our product proposition to our customers. We actually help them to manage risk, which actually reduces risk for us.

We do that through a financial crime suite of technologies and our compliance team. So we’ve made a customer onboarding platform available to automate onboarding of consumers and businesses in the UK. That helps us get a product to market and start building relationships with customers that in the future, hopefully will work with us.

Could you elaborate on the products that you aim to offer?

Our target market is all regulated fintechs and, in the future, embedded finance providers.

We need to work with organisations that have a responsibility to manage customer money, but they’re not authorised to hold customer money. It’s only banks that get to hold customer money, so we will offer a number of accounts.

We’ll offer a current account for our fintech customers to hold their operating cash. We can also offer them savings accounts for their own money. And we’ll offer what we call safeguarded accounts – it’s segregated safeguarding accounts for the fintech customers’ money so we keep that money safe.

We’ll also offer client money accounts. So if you’re in the investment management or wealth management or law segments, there’s different legislation that requires you to hold client money with a bank in something called a client money account or cash account, which is a very particular type of bank product. It requires quite a lot of specific knowledge and control around those products for the market. In essence, we want to make that all as simple as we can, so that fintechs can come to us as their banking partner.

For example, at the moment, fintechs can’t offer savings accounts to customers that pay interest – only banks can. We want to help fintechs be able to do that and offer those services to their customers, and also lend to our customers as well. So it’s the ability for us to provide credit to our customers for them to create credit and lending products for their customers.

We really see ourselves as a community provider that focuses on the fintech ecosystem and tries to make it as easy as we can for them to operate in a safe and sustainable way.

How would you say Griffin is different from the competition – what is your edge? Why should clients come to you over anyone else in the market?

Fundamentally, we don’t provide products and services to consumers and corporates. That’s not our business. We provide capability to our clients. We want to help them provide services to their consumers and their corporate customers.

There are very few banks out there that are providing the bank as a foundation for other businesses to build on in a safe, sustainable way, which makes Griffin pretty unique.

Normally, banks manufacture products for customers, they acquire those customers directly and then provide those products to those customers. We take a different approach.

In terms of funding, how much have you raised so far?

We have raised about $28 million so far.

Will we raise money in the future? Yeah, we will. But we’ll do that as we need to. We won’t be, I guess, greedy, and raise too much money on too crazy valuations. We’re trying to build a sustainable, long-term business that has a solid foundation that is built on creating value.

One of the interesting things about Griffin is that we’re building a lot of the core technology ourselves. So, the core banking system is built by our engineers. We also invest a lot in product design and the user experience to make it as easy as we can for our customers who are principally software engineers and who are used to working with technologies and the integration of technologies.

We have made a sandbox available already. Our platform is available to anybody for free on our website. So competitor, customer, researcher, anybody that wants to, can go onto our website and use this test environment.

Rather than forcing potential customers through endless conversations and meetings to try and sell them something, we’d rather create an open environment that allows product managers and software engineers to just try, and if they need help, they can click a button and have a chat with us.

We kind of want to get out of the way a bit. Provide support that’s needed, but just not force people into a difficult process of working with a bank, as it’s often very difficult to start a relationship with a bank.

The fintech market doesn’t have a lot of choice about which banks to work with. Some of the high street banks do work with fintechs, most of them don’t. Those that do work with fintechs are very selective about which clients they work with. So it’s very hard to even find any bank that will work with you, but this is a necessary thing.

What are Griffin’s plans for 2023?

Some of the plans are in execution already.

One of the initiatives we’ve got at the moment is to get a couple of hundred software engineers from the fintech community registered on our sandbox and build prototypes and test things and try to build products that their customers want and solve real problems.

At some point, we hope to get the licence through. And then we’ll be working with a smaller number of customers to do pilot projects and proof of concept projects. We should be in full operation at some point next year.

Is there anything else you’d like to add?

I believe there’s a lot of confusion in the market about what is a bank and what is an electronic money institution. Even at this conference, there’s such a lack of knowledge about the fundamentals of these two types of business. I think people should just be more open minded to learn what the differences are.

And there’s another theme, which is to manage financial crime and risk. A lot of people think this is a technology problem. Yes, technology can help. But it’s fundamentally about managing risk. To manage risk, you need expertise. And you also need a really clear business model.

So the first thing you need to do is have people with expertise and understanding of your business that can help come up with a risk-based approach, and then you can implement technology that will help you manage that. And some of these things really aren’t optional.

And culture is probably another one. When you create your company, whether it’s got five people, 20, 50 or 100 people, you need to invest in a culture that’s actually going to help and protect your business. A lot of companies don’t invest too much in culture.

Given the current market scenario, do you feel confident going forward?

I’m very, very confident in Griffin, the value proposition and the value that we create.

The general environment has changed very, very quickly. There’s been a shortage of investment funds that companies were expecting to close funding rounds, and companies get geared for that expectation. And that’s fine. There’s nothing wrong with that approach. But when the market totally changes and that funding isn’t available, it’s as if all the rules of the game have just changed.

It’s unfortunate that some companies have found themselves in a position where they highly leveraged and invested to grow, but the ability to bring new funds into those businesses is drying up. So it’s a difficult time.