ClearBank, a UK fintech that has built a new set of cloud-based financial rails that allows banks and other customers real-time clearance on payment transactions and other financial services, has closed a big round of funding. The company has raised $225 million from a single investor.
The startup was founded in 2015 and has raised over 200 million dollars from investors, including Canadian businessman John Risley. The current valuation of ClearBank is likely to be $590 million, based on the end of December valuation.
The company's current size and ambitions speak to potentially larger numbers. 13 million bank accounts and 3 billion dollars in assets are covered by those customers.
For a number of years, the tech world has been awash in fintech, with businesses built on the concept of cloud computing and embedded. The growth of e- commerce and other services on digital platforms has spurred that trend.
Many of the new services have been built on top of legacy infrastructure. It can take days to reconcile and settle a transaction on traditional payment rails, which is why some companies have built tech to get around this. Because they have used tech to assess the overall risk of any single transaction getting rejected and is taking the calculated risk itself, they will be able to offer faster processes than if they had not rebuilt that infrastructure.
26 countries are only just implementing the Faster Payment scheme that the UK has had for some time, and Europe and the U.S. have been very slow in modernizing. The discussions on cutting off Russia have been slow.
ClearBank says that it has built a new version of the infrastructure from the ground up that works faster.
ClearBank claims to be the first clearing bank to launch in the U.K. in 250 years, and the big four have ruled the roost since.
Our aim is to provide real-time services for everything. ClearBank has built everything into one stack, which means that money moving is going through a single system rather than through several different channels, as well as allowing those plugging into its system to see how funds are.
The company provides banking-as-a-service to its customers both for their needs as businesses, and for them to in turn provide to their customers. The four main channels used in the UK to handle payments are Faster Payments, BACS, CHAPS and direct debit.
The company launched multi currency and foreign exchange services to UK customers several months ago, and plans for the investment will include expanding that to other currencies and facilitating interbank payments, both to provide the services to existing customers that have international footprints, and to work with customers in other markets.
It has become easier for non-financial companies to move into financial services as a result of the changes brought by fintech. That gives companies an opportunity to enable that adoption.
ClearBank is providing the clearing and embedded banking infrastructure for companies that are becoming fintech companies.
The rise of ClearBank points to the fact that a new generation of startups are willing to tackle the last tier of infrastructure. Payrails, a startup out of Germany, launched with funding from a16z with its own ambitions to build new infrastructure to handle payments specifically for marketplace and other businesses that sit in the middle of complex transaction architectures.
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