Interview | John Salter Chief Customer Officer at ClearBank

"We’ve seen 10 years of change in banking and payments in just 10 months because of the pandemic." John Salter, Chief Customer Officer at Clearbank explores the current situation of the banking industry and why COVID has fast forwarded digital transformation. John also explains the role ClearBank are playing in accelerated digital transformation in payments.

You are the first new clearing bank in the UK for 250 years; what inspired the business in the first place?

ClearBank was founded with a mission of overhauling agency banking. Not only do we act as an intermediary platform providing transactional solutions, but we also operate as a functioning bank. From this unique position, ClearBank sits at the intersection of financial services and fintech, supporting both innovation and access to payments.

We started with six people in a basement office in the east end of London. We now have more than 350 employees based across the UK, with 170 businesses using our platform, and another 150 in the process of coming on-board.

We want to remove the barriers to banking for pioneering fintechs and enable them to integrate innovative banking services without the cost and complexity of becoming a bank.

We are going through an incredible period of accelerated digital transformation in payments – what is ClearBank’s role in this change?

Fintech is no longer in its infancy—the market is maturing quickly, as are the banking requirements of fintech businesses. And as banking requirements change, so does the way they need to be delivered, this is where ClearBank comes in.

Our B2B offerings, centered around agency banking and banking-as-a-service (BaaS) meets the needs of a range of financial service providers, who themselves have both business and consumer end-users. This means that unlike many other BaaS providers, ClearBank does not offer products or services that compete with those of its customers.

To put our role into numbers – ClearBank also powers approximately 1% of Faster Payments in the UK and that market share is accelerating rapidly – in 2020, a total of £2.1 trillion was transferred in the UK using this method.

How are you working with FinTech’s to drive innovation at ClearBank?

We are extremely proud of our strong industry reputation and relationships with banks and fintechs alike. Some of our most notable achievements include striking deals with major banks like JPMorgan and market-leading fintechs like Tide, Recognise and Chip.

• TIDE - In partnership with Tide, ClearBank won £85m from the RBS Alternatives Remedies Package to improve banking for SMEs. To date, the ClearBank-Tide partnership has delivered digital banking services to 230,000 customers (2 in 40 UK SMEs).
• RECOGNISE BANK – ClearBank provides account infrastructure and access to the UK’s payment schemes, including Confirmation of Payee for Recognise customers. Our CoP offering dramatically reduces the risk of fraud for customers and gives them peace of mind.
• CHIP – Through ClearBank’s BaaS proposition, Chip’s users have individual savings accounts, are now covered by the FSCS on deposits up to £85,000 and are connected to Faster Payments for real-time withdrawals.
• VertoFX – Verto is the first to use ClearBank’s multi-currency product. The partnership brings U.K. and European SMBs multi-currency bank accounts and FX solutions together to further remove barriers to cross-border payments. It also enables all Verto users to accept and send payments from one simple platform.
• PAYNETICS – The partnership will enable Paynetics to deliver real-time payment and additional banking services to customers, and ClearBank has enabled Paynetics to create brand new services in less than eight weeks.

In these times of accelerated transformation; how are you driving a culture of innovation?

To a greater or lesser extent, every fintech needs to work with a bank. And the nature of this relationship is coming to define our industry.

Earlier this year, we commissioned a report to explore how well Fintechs are being served by banks.

The report revealed just how critical an agency banking partner is the success of any business. Agency banking has evolved from a tactical matter focused on outsourcing compliance and operations to a strategic one focused on technology innovation and operational resilience.

We help our partners remain innovative and competitive via our API which integrates with a bank’s operating system, offering real-time integration. The bank can connect with multiple payment schemes, including BACS, Cheques, CHAPS and faster payments, all allowing transactions to clear rapidly and over a secure platform.

Can you tell us about the Multi Currency solution that you have launched for FinTechs?

ClearBank’s API-driven technology and Banking-as-a-Service (BaaS) capabilities have already created seamless payment solutions in Sterling, for use in partnerships with the Department for Work and Pensions and PayPoint, Tide and other multi-national brands, so the expansion into multi-currency and FX is a natural and pertinent progression for the clearing bank.

The new multi-currency offering allows users to transact internationally at a reduced cost and with the greatest ease, connecting UK and European SMEs with a multi-currency bank account and user-friendly FX solutions. The technology can be integrated into platforms that currently have a multi-currency offering, to enhance the service and better serve customers.

You’ve been huge advocates of Embedded Finance – what impact do you think this could have?

Open Banking payments and Embedded Finance have revolutionised the way in which merchants receive funds from their customers.

The technology is overhauling the retail experience, by allowing fintechs to develop new offerings for consumers using Open Banking.

Embedded Finance has become the catalyst of Embedded Banking, where both financial brands and non-financial brands will look to embed third party regulated banking services and capabilities to reduce the cost and complexity of offering financial products.

What do you think the future relationship between fintechs and regulation is?

Much of the friction between fintech and regulation stems the way data and transactions are managed by central banks who control market participants via opaque systems.

We’ll continue to see innovative collaborations between banks and fintechs, but going forward, we’ll likely see the implementation of blockchain technology being more widely embraced across the industry to experience the benefits of increased trust, security, transparency, and the traceability of data that the Blockchain can provide.

Outside London where do you see FinTech innovation coming from?

London is undeniably the Fintech hub of the UK, however, a third of all FinTechs are based outside London and to date, cities such as Manchester and Leeds have not always received the recognition they deserve for their increasing scale and activity.

These Northern hubs house over 135 fintechs – the highest count outside of London.

Do you think Covid has driven innovation in FinTech?

Absolutely. We’ve seen 10 years of change in banking and payments in just 10 months because of the pandemic.

While Covid-19 has demonstrated we have a long way to go when it comes to digital transformation, the crisis has prompted real change and innovation.

We only have to look at Deloitte's annual ranking of the top 50 fastest growing technology companies in the UK, which ClearBank topped this year, to see the phenomenal rate of growth in the industry, with a dozen fintechs singled out for inclusion in the annual report.

Much like the industry, ClearBank has grown rapidly over the last year. Since September 2020, we’ve seen a 56% increase in customer acquisition, a rise of over 270% in customer balances and 325% more in monthly transaction volume.