The clearing bank hit monthly profitability in the UK since October.
Fintech firms are leaving BaaS for embedded banking, ClearBank-commissioned study finds.
ClearBank, a UK clearing and embedded banking provider, saw its January-October 2022 revenue surge almost three-fold to £45.4 million compared to the same period last year. The clearing bank, which was founded in 2015, said it hit monthly profitability in the UK starting in October.
ClearBank disclosed these on Thursday in a statement detailing its fiscal year 2022 year-to-date (YTD) performance. The UK-based bank explained that the growth in its revenue is being driven by increases in its transaction volumes, new customer sales, interest income and forex and multi-currency offerings.
“ClearBank now supports over 200 financial institutions, including Chip, Raisin, and Recognise Bank. With 17.5 million bank accounts and £3 billion held in balances, ClearBank has dramatically increased in scale,” the firm said.
Further explaining its growth, the clearing bank noted that it has cast its net wider with the introduction of multi-currency accounts and international payments in 11 currencies and 65 forex currency pairs. In addition, ClearBank said it now offers “a Faster Payments Originating Overseas product to enable its partners to use Faster Payments to process GBP payments that have originated outside of the UK.”
In June, ClearBank partnered with Ziglu in order to provide agency banking services to the UK-based money app. With the collaboration, Ziglu started offering virtual GBP bank accounts to its customers, and ClearBank supports this by providing real-time processing and reporting abilities.
Meanwhile, in March, ClearBank secured £175 million in funding to accelerate its global expansion. The round was led by Apax Digital, the growth equity arm of private equity advisory firm Apax Partners LLP. In addition, the round received participation from CFFI UK Ventures (Barbados) Ltd and PPF Financial Holdings BV.
With a licensed clearing and embedded banking platform that is scaling rapidly, we expect to build on the success of 2021, and our accomplishments thus far in 2022, ahead of expansion into Europe in 2023 and the US soon after,” Charles McManus, ClearBank’s CEO, explained, speaking on the company’s profitability and the YTD revenue.
‘The Growing Pains of BaaS’
Meanwhile, a new study conducted by advisory firm Aite-Novarica Group on behalf of ClearBank “reveals the growing pains of Banking as a Service (BaaS) and how fintechs are embracing Embedded Banking.”
The study found that fintech firms in Europe are struggling with BaaS services, with 20% of them losing $11 million per year in product delays attributable to BaaS providers.
The study is based on interviews with 20 major fintech firms in the UK and Europe. These firms have at least 50 employees and average annual revenues of $25 million between June and September 2022.
Moreover, the study found that fintech firms are leaving BaaS providers and opting for embedded banking. While 31% of these firms said they have changed their BaaS providers, 25% said they will be using embedded baking providers in the future. This is regardless of "confusion in the market between the two categories.”
“Many BaaS and Embedded Finance offerings are no longer meeting the needs of their customers. They don’t offer the precision customers are demanding, and they can make it unclear what protections are in place to keep consumer funds safe,” explained John Salter, ClearBank's Chief Customer Officer.
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