UK-based ClearBank reports that European fintech companies see banks as key partners in ensuring regulatory compliance
ClearBank, the UK’s first “new clearing bank” in over 250 years, aiming to bring open competition and transparency to the country’s financial services sector, has published a report on working relationships between banks and fintechs.
The report is entitled: How well are fintechs served by banks? (Agency banking booth across Europe).
As ClearBank notes, the new report is based on an independent survey of 100 fintech companies in the Netherlands, Lithuania, Sweden, Switzerland and the United Kingdom. According to the report, these are the leading fintech markets on the European continent.
The report examines the following:
- Which agency banking services do fintech companies use?
- The importance of agency banking for fintechs
- How “satisfied” fintechs are with these types of services
- Why larger fintech companies are “less well served by banks”
- The “Effects of Agency Banking Services on Fintechs”
- How agency banking “must change to better serve fintechs”
As mentioned in the report:
“More than 50% of fintechs see banks as business-critical partners who help ensure compliance, generate new income and reduce operating expenses. Despite the dependence of fintechs on banks, almost half of the respondents (49%) do not believe that their agency bank has helped their business. “
The report added:
“Fintechs are not satisfied with the existing services they are receiving. Less than half were satisfied with access to real-time payment networks, and a third of fintechs were dissatisfied with offers for multiple currencies. And when it comes to new service needs – single API access, visibility into where funds are being held, and better use of open banking – only 22% believe their current partner can provide these services. “
As mentioned in the report, the bigger the fintech company or business, the less well served they are by their bank. The report also mentioned that the bigger the fintech technology, the more they rely on their banking partner to provide a wider range of increasingly sophisticated services that are likely to require many licenses – deposit-protected bank accounts, multi-currency accounts and access rails like SWIFT are prime examples. “
The report also found that 71% of larger fintech companies use a traditional bank rather than a modern clearing bank to provide their banking services to agencies.
The report added:
“Unfortunately, fintechs report that the more demanding they become from their bank, the less well they are served.”
Larger fintech firms also report that “key elements of agency banking were missed,” including:
- 50% of the respondents did not log any votes in real time
- Only 30% of the major fintechs have access to real-time payments
- 66% of the larger fintechs need at least 2-3 days to open a customer account
- Overall, 42% of medium-sized and large fintechs are “indifferent” to their agency banking partners.
You can find the full report here.