On track to open its doors in Autumn 2017, ClearBank is planning to deliver a new level of open competition and transparency to the UK financial services marketplace. Nick Ogden, ClearBank’s executive chairman says that the clearing bank will “radically change and improve market dynamics for financial services providers, PRA/FCA regulated businesses and fintechs.”
Built from the ground up on Microsoft’s Azure cloud platform, and benefiting from Microsoft’s cyber security shields, ClearBank has been designed to meet the needs of the UK banking market now and in the future. “We chose Microsoft due to the strength and resilience of its cutting-edge technology and ongoing multibillion dollar investment in cybersecurity and infrastructure, which is central to our business,” explains Ogden.
ClearBank has been a long time coming. “We had the idea for ClearBank back in 2014, following a chance conversation around market access,” Ogden explains. “The conversation centred on the fact that numerous papers since the Cruickshank Report back in 2000 have highlighted the need for structural market reform. In the 1960s there were 16 banks providing clearing services. Since then considerable consolidation has occurred, which has had the effect of decreasing competition. Moreover, the arrival of the Internet in 1994 and the subsequent shift in access to financial services has identified new challenges and opportunities. E-commerce is an obvious example.
“We believe that banking market revolution can only truly be unlocked by a brand-new clearing bank. One without the challenges associated with legacy architecture, one without operational reliance on any other bank, one with new operational efficiencies and customer standards.”
Ogden is confident that ClearBank will benefit most financial services businesses in the UK. “We’ve built ClearBank on cloud technologies from the ground up. Without the constraints of years of legacy IT infrastructure, we transform the agency bank experience. In addition, our state-of-the-art technology transforms the ability for financial institutions to provide current accounts to their customers, resulting in faster and more efficient payments, whilst delivering financial inclusion,” he says. “Every organisation that provides financial services in the UK, from fintech startup to established financial institution, needs access to clearing and settlement banking services (they need to be able to move money from one account to another). Until ClearBank, there were only four clearing banks that could offer these Agency Banking services: RBS, Barclays, Lloyds and HSBC.”
ClearBank has no direct consumer relationship. It is the first UK clearing bank that offers services that intentionally complement its customers’ market activities to drive choice and competition in the wider market. This, Ogden believes, will equip it for the future of the industry. “The future will be heavily influenced by cognitive services that provide verified identity and transactional speed and efficiency,” he explains. “Both of those attributes are central to the design of ClearBank.
“People expect transactions to be friction-free and as easy as handing coins and notes around to people you know and recognise. Only when we reach that efficiency point electronically and globally will transactional banking become of age, delivering with it a wide range of on-demand financial services that businesses and consumers can consume efficiently and selectively.”