The British infrastructure provider ClearBank has made a few new leadership hire announcements in the last few weeks. But for us embedded finance folks, the announcement of Paul Staples as the new group head of embedded banking is obviously the most important one. Paul has not only been in embedded finance for a very long time, including building the embedded finance product at HSBC, but he is obviously also a reader of this newsletter 👋
For the few of you that don’t know (much about) ClearBank, the bank was founded in 2015 and was the first fully cloud-based clearing bank in the UK. ClearBank has been ranked among the fastest-growing tech companies in the UK and is the infrastructure partner of hundreds of banks and fintech companies, such as Tide, Allica Bank, Raisin, and Paynetics. These companies are regulated, usually having an e-money licence, and they use ClearBank for access to the local payment rails (=clearing) and accounts (i.e., safeguarding accounts for e-money institutes).
With the hire of Paul, ClearBank has now decided to go after another type of customer: non-financial brands and, thus, unregulated companies. While this may sound like a small change, it definitely is not. Yes, both types of companies will use the same underlying product (i.e., access the same payment rails and use the same type of accounts), but because those companies are unregulated, they will need a lot more. While ClearBank can rely on the fact that a regulated customer is either aware of certain compliance aspects or can even outsource some of the work to them, that is not always the case with unregulated companies. This means that unregulated companies will need to consume different APIs and have different processes. And it doesn’t stop with product and compliance. Since most of the unregulated businesses have never done anything in fintech before, they will likely need more support with understanding, launching, and promoting a fintech product.
Due to ClearBank’s track record, we all expect that their embedded finance product will have a similar impact, but only time will tell. The UK fintech infrastructure market is seeing some interesting changes (i.e., challenges of Railsr and launches from NatWest Boxed and Griffin), and now with ClearBank extending its focus, we will make sure to watch.
*If you search online for ClearBank and embedded finance, you will find a lot of content describing ClearBank as an embedded finance provider. However, it seems that the company has not worked with non-financial brands before and only focused on regulated entities, so technically, they have not been in embedded finance before. Correct me if I’m wrong 🤓
