May 26, 2022

Clearbank, a UK-based fintech company that has created a new set of cloud-based financial rails that allow banks and other customers to authorize payment transactions and other financial services in real time, has completed a major funding round. The funds will be used to expand its services beyond its home market and move into new areas such as cryptocurrency exchanges. The company has raised £175 million ($230 million at current exchange rates) from an investor, private equity firm Apex Partners.

The startup, founded in 2015 and launched in 2017, has not disclosed its valuation, but CEO Charles McManus said the company had previously raised £195m from Canadian businessman John Risley and investors including firms PPF Group and Norther Private Capital. , and this is a significant increase in new valuations after the Apex investment. Pitchbook notes that Clearbank’s end-December valuation was just under £274m, making its current valuation likely at a conservative estimate of $590m.

But the company’s current size and ambitions are potentially attractive in large numbers. Originally founded by Nick Ogden, who was also the founder of Worldpay (which was acquired by Fidelity for $43 billion, the largest deal in the international payments industry at the time), ClearBank currently has 200 clients. use it. Infrastructure to enable faster transactions, including UK companies such as Tide and OakNorth, as well as international firms such as Coinbase, which use Clearbank to provide clearing and payment services to their UK clients. These clients cover about 13 million bank accounts and £3 billion (about $4 billion) in assets.

For years, the tech world has been full of fintech—with lots of sophisticated banks; companies built on the concept of APIs and cloud computing and “embedded” third-party financial services; artificial intelligence, personalization and mobile applications; and many other technology-driven innovations designed to change the way we spend, save and invest in new and possibly better and easier-to-use ways. The development of e-commerce and other services on digital platforms has further spurred this trend.

But the existence of ClearBank highlights the untold truth of all these innovations: Many of these new services are built on existing infrastructure. Some companies, such as Stripe, have built in technology to overcome some of the barriers this creates: for example, it can take several days to clear and settle a transaction in traditional payment systems. Fintechs like Stripe will enable faster processes, not because they overhauled that infrastructure, but because they used technology to assess the overall risk of an individual transaction and take on the calculated risk. There is an additional charge to provide the service. Grants (and make money from deals that make up for one that didn’t go through).

“Europe and the US are too slow to modernize,” McManus said, adding that 26 countries are only implementing the fast payment scheme that the UK has been doing for some time. Just look at the discussions about the Swift and Russia cuts and how slowly it follows.”

The alternative is to build a new version of this infrastructure from scratch that will run faster, which Clearbank says has already been done.

ClearBank describes itself as the first clearing bank set up in the UK in 250 years – the “Big Four” that have so far ruled the country’s clearing stick like Barclays, Lloyds, HSBC and NatWest – and aims to capitalize on the building. . The railroad has made payment services in the UK faster than those that are running and continues to expand, providing more services in its home market as well as taking them overseas.

“Our goal is to provide real-time services for everything,” McManus said. According to him, ClearBank built everything into a single stack, which means not only the movement of funds through a single system, and not many different channels, but also the people who connect to the system. the fund is working. “This means more comfort, visibility and faster transactions,” he said.

Today, the company provides its customers with banking as a service to meet their needs and business and, in turn, to reach their customers. It also provides links to the four main channels used to process payments: Fast Payments, BACS, CHAPS and Direct Debit in the UK.

The company launched multi-currency and forex services for UK clients a few months ago, and investment plans include expanding into other currencies and facilitating interbank payments both to serve existing clients with an international presence and to collaborate with clients. other markets.

One of the big changes that fintech has brought is that it has become much easier for non-financial companies to migrate to financial services, and many have done so to increase their revenue and customer touchpoints. This provides opportunities for companies to make this implementation possible.

“All companies are becoming fintech companies, and ClearBank is providing them with clearing and embedded banking infrastructure — starting with the fintech system itself,” Mark Beth, partner at Apex Digital, said in a statement. “We’ve seen firsthand the power of his platform, and we’re thrilled to partner with Charles and existing shareholders to take ClearBank global.”

The rise of ClearBank indicates that as fintech matures, we are seeing a new generation of startups poised to tackle this cutting edge infrastructure. Earlier this week, a German-based startup called Payrel (name written inside) also started funding a16z with its ambition to build a new payment processing infrastructure, especially for marketplaces and other companies that are in the process of complex transactions. Architecture.

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