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Embedded finance is "going to change the world forever", says ClearBank boss

Charles McManus, the CEO of ClearBank, gave an upbeat assessment of embedded finance and said it was a trend which big banks were "concerned about".

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Embedded finance is “going to change the world forever”, according to Charles McManus, the CEO of ClearBank.

Speaking at AltFi’s Festival of Finance 2021, McManus, who has over 30 years experience in banking and wealth management, offered an upbeat assessment of embedded finance.

The CEO of the clearing bank said embedded finance was a trend which big banks were particularly “concerned about” as it was threatening to “eat their lunches”.

Embedded finance allows brands to offer financial services to its customers without them providing the software or funding.

For example, customers can pay for an Uber through the app or set up a BNPL agreement through a BNPL firm directly on a retailer’s website.

McManus said: “I think embedded finance is going to change the world forever basically.

“I think there are some real opportunities. And it’s really interesting to me as well coming from big banks and having worked at RBS (Royal Bank of Scotland) and RBC (Royal Bank of Canada). What are they really worried about?

“I don’t think they are worried so much about consumer competition in terms of Monzo and Starling.

“But they are concerned about embedded finance, which will move wholescale e-commerce away from them into either Open Banking or the BaaS (Banking as a Service) players and start eating their lunch.”

McManus also said that coming out of the pandemic that private equity and venture capital funding for fintechs was bouncing back.

But he cautioned that fintechs must focus on “profitability” and “sustainability” to lure in investors.

He said: “I think there is a tremendous opportunity. But I think people have got to stay very focused. 

“The world has changed from the point of view of investors just investing for revenue and growth. 

“Profitability and sustainability, absolutely key now.  And that is sorting out you know those that will survive from those that are sort of one-trick ponies or a one minute wonder.

“But I do see a continued explosion, not just in the UK but obviously across Europe and obviously the SPAC market as well from the US coming to Europe, consolidation, M&A activity. There is a lot of exciting stuff in this market.”

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