Nick Ogden seems to have a thing for years that end in seven.
In 1997, he founded Worldpay, an online payments processor based in the U.K. that he sold to RBS in 2002. In May 2007, Voice Commerce, the voice biometrics company he founded in 2003, launched VoicePay, the consumer-facing application of the company’s secure voice-initiated transactions processing platform. In January 2017, he took the wraps off the first modern clearing and settlement bank in 250 years — or since 1767 — in the U.K.
That new bank for bankers, ClearBank, is one that Ogden and a small team have been working on for the past several years — and one that’s about to shake up the world of bank clearing and settling in the U.K.
With several big twists.
Ogden told Karen Webster that the ClearBank journey has been one filled with a number of learnings — all against a single, unwavering, guiding principle: Two hundred fifty years is a long time to live with the same core banking infrastructure, especially since banks need many more things today than those “blocked-up” legacy systems were first built 250 years to do.
“When the ‘pipes’ are that blocked up, there’s really only two options: Put up with it and have a dripped tap or replace the pipework — and that’s what we’re doing,” Ogden explained.
As an infrastructure company, ClearBank, Ogden said, is giving banks an option to replace their existing core systems with an incredibly modern infrastructure that will improve their processing efficiencies, risk- and fraud-proof their operations, and enable a number of new financial services capabilities.
Unclogging The Pipes
Ogden said what sparked the idea for ClearBank was the perfect storm of market consolidation in the U.K. that resulted in the reduction in the number of clearing banks to four, the incredible rise in FinTech innovation in the U.K. and the dearth of anyone innovating in core banking systems — or even talking about establishing a new clearing and settlement bank that might expedite FinTech innovation. And it was that last observation that set the wheels in motion.
“When you’ve only got a market in the U.K. served by four banks that control that structure, then you have to work and run at their pace and you can’t set your own,” Ogden said.
In other words, it was impossible to deliver innovative products and services if the core banking systems they were using weren’t modern enough to support them. That, Ogden observed, blunted the ability of U.K. FinTech innovators to access infrastructure that was as innovative as their ideas.
Owing the dearth in innovative new clearing banks to political or regulatory mandates, he started to ask around — and eventually learned that there was no such rule or political regime blocking such an entrant. The more he talked to people about the idea of establishing a new clearing bank, the more enthusiastic people became about the need to have something new, fresh and modern — and disruptive — in the mix.
“The only real way to create change in the marketplace is to actually allow a new incumbent to come in and shake it up,” Ogden said.
On the way to shaking things up, Ogden quickly learned that 250 years is also a long enough time that no one, literally, exists to ask how things were done — or why — and no “instruction manuals” existed to offer any helpful guidance.
That lack of foundational knowledge created waves of frustration for Ogden and his team while at the same time it giving them the greenfield environment they needed to create an “intelligent banking platform” capable of bringing all of the payments schemes together into one single efficient system.
“[Our team] had some massive ‘a-ha’ moments,” Ogden said, “mostly because the way that the structures for creating new banks have been put together over 250 years, it was obvious that no one would ever even consider trying to do what I’ve done.”
The support for ClearBank from both regulators and the payment schemes, though, Ogden said, is a testament to his vision and need for something new in the market.
Leveling The Competitive Playing Field
Ogden said ClearBank will provide the type of clearing services that will enable financial services providers, FCA-regulated businesses and FinTechs to change and transform their business.
And improve it in the areas that really matter, including cybersecurity.
With every single bank and financial institution around the world exposed to cybersecurity threats, Ogden said that determining how to protect itself from theft was among his highest priorities.
“When we started to look to how we were going to build ClearBank, [cybersecurity] was on our whiteboard — it was priority number one,” Ogden added.
For that reason, ClearBank wanted to partner with a company that was making serious investments and strides in developing cybersecurity solutions to safeguard its users. ClearBank found what it was looking for in a partner in Microsoft, which he said spends $1 billion a year on cybersecurity. ClearBank is built on Microsoft’s Azure cloud platform and leverages its cybersecurity shields and U.K. data centers.
Voice biometrics is already a core capability of one of Ogden’s other ventures, Voice Commerce, which makes it possible for consumers to authorize transactions using only their voice. Voice Commerce is a regulated financial service group and one of the first to be licensed as a Payments Institute by the U.K. regulator.
Clearing The Path To Change
Ogden also hopes that with a new platform like ClearBank, all financial institutions, new and existing, will be motivated to think differently about what’s possible. For instance, he said, over the years, the lines between transactional banking and financial services have become quite blurred, and businesses and consumers don’t necessarily need (or want) to consume financial services from the bank that provides them with transactional services.
The ability to unbundle those services and pick from a portfolio of best-in-class services that meet their needs is not only important, it’s what consumers and businesses want.
“Creating a really healthy marketplace is giving people the ability to have their transactional banking services with a transactional bank of their choice and for that transactional bank to provide limited cash flow-based services if they choose to, but still promote and encourage their customers to source financial services from an open market and competitive spaces,” he explained.
ClearBank’s ability to enable this sort of unbundled innovation will make it possible for a FinTech innovator to develop and deploy customized offerings, which he says will result in a more competitive marketplace and happier customers.
On a global scale.
While domiciled and launching in the U.K., ClearBank’s cloud-based core banking platform, Ogden said, can enable a bank in New Zealand to connect to it and begin using the core banking services — and with a setup time of just 30 minutes.
“We absolutely know that the demand for change exists,” Ogden stated, “and we want to be there for those change agents.”
Kinda makes you wonder what the year 2027 will bring.