ClearBank Head of Fintech Innovation
The fact that ClearBank continues to grow in a relatively difficult market is testament to how successful it has been in identifying the needs of financial service providers and creating infrastructure solutions to meet them. Still, many businesses are struggling, and McManus believes we will see greater consolidation as the market adjusts. Up to this point, only 5% of new banks globally have made profitability – an exclusive club that ClearBank is proud to be a part of.
“Any financial stress will always find the strong from the weak on a financial basis,” says McManus, who has been through previous recessions and downturns. “Competition is a very good thing, but financial strength is also important, and moving from customer acquisition and top line growth to profitability is, in my view, a very good thing.
“To win globally it is very difficult. So M&A activity – in terms of valuations becoming more realistic, and the public market actually finding things difficult in relation to valuations – will all drive M&A activity.”
More financial regulation “should not be necessary”
In the wake of recent bank failures in the US – first Silicon Valley Bank and Signature Bank, then the bailout of the beleaguered First Republic Bank earlier this month – as well as the collapse of the crypto exchange FTX, confidence in the financial system has been shot. . Consumers are bound to question whether they trust suppliers, and regulators are taking a close look.
Yet a well-run financial system should not need the kind of oversight it now attracts. “It’s very disappointing because it actually stops speed and agility,” says McManus. Many companies do everything by the book, but it will always be the isolated mistakes that generate headlines and attract attention. Regulators, in turn, align themselves with an industry’s lowest common denominator in an effort to protect consumers.
But while he is generally opposed to greater regulation and bureaucracy, there are some cases where McManus looks forward to a little more clarity. “In the digital resource space, greater clarity will actually increase speed,” he says.
“Some of it is less about greater clarity and more about ownership, who regulates? If you take the payments space, you’ve got Pay.UK, you’ve got PSR, you’ve got the Bank of England… you’ve got a lot of players and they all have to come together to make one change.
“We recently got caught in a payee verification idea caught between rulebooks and inertia. We want to deliver greater fraud protection to our customers, but we can’t because regulators and interested parties can’t agree [on who owns what].”