Probably many of the European readers have heard from Griffin and Lemon Markets multiple times, including in this newsletter. Both companies provide infrastructure services: Griffin is a banking-as-a-service provider, and Lemon Markets is an investment-as-a-service provider. Both companies had major announcements in the past two weeks:
Griffin announced that they received their “full” banking licence from the UK regulator FCA, which brings them a massive step closer to offering their banking-as-a-service products in the British market. Some other providers in the market rely on an e-money licence, which excludes them from offering lending and interest-bearing account products. On the other hand, an e-money licence is obviously easier to obtain than a banking licence and can be more flexible. It is impressive, though, that Griffin has obtained their banking licence roughly a year after starting the process (excluding the initial preparation work before starting the process).
Lemon Markets had already received their investment licence in January of this year and announced last week their public launch with their first customer, Beatvest. It took Lemon Markets approximately three years after founding to receive the licence and another few months to go live.
Obviously, the two cases are very different (different financial products; different markets), but it clearly shows the time and perseverance it takes to win (or even launch) a fintech infrastructure product. As you hopefully know, I am unbiased when it comes to infrastructure provider offerings; however, I was really excited to read the two announcements for a few reasons:
I am very excited for Griffin’s full launch in the UK. By then, we will likely have three providers in the market with a bank licence (Griffin, NatWest Boxed, and ClearBank) and a few more with an e-money licence (i.e., Modulr, Weavr, and Nium). Maybe this many providers on each side will help us in a few years to see which model is better suited for embedded finance? (In Germany, we do have Solaris with a bank licence and two others with e-money licences, but the numbers are a bit too small for such an analysis.)
Lemon Markets will now compete directly with their biggest rival in Germany, Upvest (in the UK, Seccl and Wealthkernel are similar providers). Upvest has already received their licences in 2022 and won major deals with N26 and Revolut. But the team at Lemon Markets is great, and the market is massive (we are not just talking about ‘embedded’ investment but fintech companies and financial institutions). And competition is good, especially for buyers. So I am hoping to see even more announcements from all these providers in the near future.
