“10 years of change in 10 months”: an interview with the CEO of the fastest-growing UK tech firm
After securing £175m in funding earlier this week, ClearBank CEO Charles McManus sat down with AltFi to discuss the company’s European expansion.
In a round led by Apax Digital, the UK’s next-generation clearing and embedding bank will use the investment to expand across Europe and beyond.
McManus explained how ClearBank enables companies to act as if they have a banking licence.
“We're trying to empower fintechs and financial companies and non-financial companies to behave as if they're a bank and provide banking services to their customers,” he said.
“We believe we are quite a unique bank because we focus very much on clearing and embedded banking. We don't do retail banking or business banking or actually lend money in terms of credit, which is what every other bank normally does,” he added.
“We want to be the best in the clearing and embedded banking infrastructure space to empower all our [customers] to get the best payment back end, for their exciting front end customer propositions.”
ClearBank currently serves more than 200 financial institutions and fintech customers, with 13 million accounts and £3bn in balances.
“We've been very fortunate with Deloitte's ranking of the fastest-growing tech firm in the UK, and that's mainly been driven by us doubling our revenues each year in the UK,” McManus said.
“We've been having a fantastic growth spell in relation to onboarding new clients and clients growing with us in terms of their expansion, unlocking their potential etc.”
The company introduced FX multi-currency to its UK clients in the last year, and McManus explained that as ClearBank’s clients continue to become more international, it’s the “natural step” to now establish a European presence.
“We chose to apply for a banking licence in the Netherlands as the home of our European bank. And then that will allow us essentially to service European and cross border European customers,” McManus said.
The company will hire up to 100 members of staff in the Netherlands for ClearBank Europe in part of its big push for expansion.
The decision to be based in the Netherlands was based on “speed to market, customer perception, long-term growth potential and costs to set-up”.
McManus expects it will take 12-18 months for a licence to be granted, and the aim is for the bank to be live and operational by Q3 2023.
After that, the bank intends to expand to look to the US and Asia Pacific.
“But certainly, our ambition is to continue that growth in the UK while we build out internationally and make sure that it's not disrupted in terms of looking elsewhere,” McManus said.
This week’s fundraise was led by Apax Digital, the growth arm of global private equity advisory firm Apax.
“You can have the best strategy and you can have money, but unless you've got the right culture in the bank, you cannot be successful,” McManus said.
“And that has been incredibly important to me in building the right culture within ClearBank, and so when we talk about there being a good cultural fit with Apax, it’s wanting to build, wanting to do business, be very straightforward, be agile, and essentially not get weighed down with bureaucracy, and untimely decision making.”
McManus noted that Apax has scaled internationally, and has the expertise and experience to help ClearBank do the same.
“It's not all just about money. It is how you spend it, the culture you've got behind it, the speed of execution and servicing customers in the right way,” he added.
One positive that has come from the past few years for ClearBank was a huge acceleration of change.
Traditionally it will take hours, if not days, for payments to settle – something McManus said banks have been allowed to get away with for far too long.
He spotted an opportunity to put that right during the pandemic, where it became even more important for so many to know exactly where their money was and when it would come through.
“The use of cash and checks obviously completely collapsed and everybody had to get onto digital payment rails in order to basically carry on their normal lives,” he said.
“So that meant that there was essentially almost 10 years of change in 10 months.”
The pandemic also saw many companies forced to update their payments and go digital in an attempt to meet customer demand.
“It's accelerated the whole agenda of change,” McManus said.
“We were able to assist and onboard a record number of clients and transactions through the pandemic, which, again, fueled that doubling of growth and almost trebling of our transactional volumes.”
“So there's no question that the speed of change was really accelerated. And that was very helpful to us in our growth journey.”