PR93351

LONDON and NEW YORK, Nov. 30, 2021 /PRNewswire=KYODO JBN/ --

The First Pre-revenue Bank in History to Attain a $1.1bn Valuation

    The Bank of London today launches as the 6th principal clearing bank of the

United Kingdom (UK), with a mission to lift communities and power the

borderless economic infrastructure of the future.

    Led by an executive team of industry pioneers and a board of renowned

global leaders, the bank enters the market with a $1.1 billion valuation,

making it the first pre-revenue bank in history to attain 'unicorn' status upon

debut.

- The Bank of London received its first bank licence as the 6th principal

clearing bank of the UK – becoming only the second new clearing bank in more

than 250 years.

- New financing is led by ForgeLight, and follow-on investment from 14W Venture

Partners and Mangrove Capital Partners, with further additional investment

committed over 18 months.

- Raising $120 million to-date, with $90m in this round, immediately ranking

the bank in the UK's top 10 most valuable fintechs.

- As part of its international growth strategy currently underway, the bank is

in advanced talks with regulators in the European Union (EU) and North America

(NA).

- The company is on track to hire over 3,000 people across the UK, EU and NA

over the next five years. The majority of these hires will be initially made in

the UK.

    Anthony Watson, Founder & Group Chief Executive of The Bank of London,

said: "We've spent over four years working quietly in the background, bringing

together veteran banking experts, leading creative innovators and visionary

technologists to build, patent and validate truly game-changing technologies

and innovations to transform the very fundamentals of banking."  

    He continued: "We leverage our leading-edge proprietary technology

innovations and differentiated bank capabilities to remove unnecessary risk,

unlock liquidity and deliver revolutionary products and services at

significantly lower costs to enable near instant settlement without a financial

intermediary in the flow of funds."

    Harvey Schwartz, Group Chairperson of The Bank of London, said: "The Bank

of London is going to address an arcane part of the global financial system –

the sleepy worlds of clearing and global transaction banking. I was honoured to

spend 21 years of my career at one of the leading financial institutions,

retiring from Goldman Sachs in 2018 as President and Co-Chief Operating

Officer. During the great financial crisis, I saw first-hand how the legacy

payments, clearing and settlement processes that are at the heart of the global

financial system contributed to bringing the world's economies to their knees,

through their inefficiencies and inherent liquidity risk."

    He continued: "Fundamentally, banking is basically an immensely complex

data problem. The Bank of London is the solution. And our unique solution is

simplicity."

    The Bank of London enters the marketplace with three distinct market

offerings:  

    1 'Global Clearing & Settlement' – The global financial system is at a

tipping point. The arcane global payments infrastructure: domestic and

cross-border payments, clearing and settlement schemes and networks are the

critical, if not well understood, cornerstone of the global financial system.

But they're costly, fractured, and friction layered - messaging, payments, and

liquidity are all on different rails – encumbered by a chain of correspondent

banks, exacerbated further by the systemic risk of liquidity intermediation and

failed payment inefficiencies.

    The Bank of London addresses the principal risk factors across payments,

clearing, liquidity and settlement (Herstatt1) – in-country, in-region, and

cross-border allowing, for the first time, the continuous transfer, with

near-instant irrevocable settlement finality, and the immediate availability of

funds disbursement: 24/7, 365 days a year. The Bank of London is working with

the market to strengthen the current payment networks and bank rails via its

next-generation payment-versus-payment (PvP)2, payment-versus-delivery (PvD)3

and atomic settlement4 innovation, evolving the legacy models to mitigate

settlement risk and unlock liquidity by leveraging its patented innovations.

    While globally payments bring almost $2 trillion in revenue for incumbents,

according to a 2021 report by LexisNexis, one of the single biggest and least

discussed pain-points for financial institutions is failed payments – both

in-country and cross-border. Failed payments are estimated to have cost the

global economy over $118 billion in 2020 alone. The payments failure rate for

banks or fintechs in mature markets such as the UK, United States (US) and EU

is a staggering 5%, on average – per company.

    2 'Global Transaction Banking' – According to McKinsey, global transaction

banking generates around $1 trillion of revenues every year for incumbents, and

yet global transaction billing is complex and confusing. There are

approximately 2,500 ways to price transaction banking, creating a gordian knot

of costs almost impossible for customers (for example UK multinationals and

SMEs) to decipher and track. While a rise in an individual fee may be slight,

total fees get higher each year – a financial equivalent of death by a thousand

cuts. Whenever the subject of bank fees arises between customers and banks,

bankers justify bank fees by the complexity of the billing system, the constant

increase in regulation, the cost of payment factories, and the investments they

represent.

    The Bank of London is finally democratising the sleepy backwater of

domestic and international transaction banking through next-generation

technologies and new business innovations providing sophisticated real-time

products and services, including leading-edge global cash management, foreign

exchange, treasury, liquidity, and other related services that are, for the

first time free from intermediary risk, un-necessary costs, and complexity. In

addition, The Bank of London will address the inherent structural failures of

the business banking sector by deploying powerfully simple, yet premium

corporate banking products and services to support businesses of all types,

from SMEs to multi-national organisations and from start-up fintechs to

household names across the UK.

    3 'Global Agency Banking' – Current 'Platform-as-a-Service' and Agency

market offerings in general are not fit for purpose. They're friction layered,

mostly single-service and carry serial intermediary risk and complexity. In

fact, very few 'Platform-as-a-Service' providers are banks at all; thus, only

as fast, or innovative as the legacy bank that 'powers' them. Lightyear Capital

forecasts embedded finance will generate $230 billion in revenue by 2025 and

balloon into a $7 trillion industry within the next decade.  

    The Bank of London is rewriting the rulebook of the legacy

'platform-as-a-service' and Agency bank models of old and helping non-bank and

other fintech brands take a slice of the $7 trillion "Banking-as-a-Service"

industry. The Bank of London effortlessly powers any company, brand, or

non-bank firm to provide end-to-end bank products and services, in full

regulatory compliance, without becoming a bank. The Bank of London's clients

will leverage its patented next-generation technologies and differentiated bank

licence to offer packages of embedded financial services, from payments to

cards, to multi-currency current, deposit, safeguarding or savings bank

accounts to increasing client competitiveness by enhancing the customer

experience with added value services, whilst generating additional revenue.

    Commenting on the bank's launch, Watson said: "The world of global

transaction and clearing banking needs disrupting. Fewer than 100 banks control

the flow of money in, around, between and out of the UK the EU and the US.

Shockingly, 75% of the world's total spendable money – just under $2.5

quadrillion – is fundamentally controlled by a small club of banks. The balance

sheet risk they pose so many years after the global financial crisis is as

acute as ever."

    He added: "Sadly, even very recent challengers, have only really focused on

overcoming basic and peripheral imperfections, while still subject to the full

constraints of the old paradigm. They offer nothing more than incremental

improvements in speed, cost, and ease-of-use. These 'digital' bolt-ons to

analogue legacy systems are the fax machines of finance. They are not paradigm

busters."

    Commenting on the bank's launch, Schwartz said: "For the past four years,

some of the brightest minds in banking, technology, economics, regulation, and

business have come together as part of this team to transform and simplify

clearing and transaction banking, the often unseen and neglected, yet vitally

important, part of our financial superhighway."

    He added: "The Bank of London is uniquely positioned to provide innovative

solutions that enhance a vital portion of the interconnected global financial

system. We are purpose-built, culturally, and technologically. The Bank of

London is innovating at our financial system's core, so that our clients are

best served with a safer, faster, more cost efficient and effective set of

service offerings."

    NOTES TO EDITORS

    1: Herstatt risk – named after the German Herstatt Bank which collapsed in

1974 due to insolvency. The operations of Herstatt Bank were suspended in the

middle of a foreign currency exchange transaction and because bank operations

were suspended, individuals who had transferred currency to Herstatt Bank

(deutschmarks) never received the agreed upon exchange currency (US dollars).

So, the term Herstatt risk now refers to the risk of the transactional partner

not settling the exchange.

    2 & 3: Payment vs Payment (PvP) models refer to a transaction, such as a

foreign exchange "swap", where there is "simultaneous settlement finality"

transfer of one currency in return for another — and both are forms of payment.

Which is different from Delivery vs Payment or (DvP) refers to a transaction

where there is transfer of some sort of ownership rights to an asset or other

financial instrument happening simultaneously to the payment settlement

finality for that asset (which may be a cash or other transaction). In both

cases, the operative words are finality, simultaneous and settlement: meaning

that the counter-party risk of one party not settling for a foreign currency,

asset, or instrument they have received is 'mitigated' as is the risk of the

other party not transferring the ownership rights despite receiving payment.

    4: Atomic settlement means that the transfer of two assets is linked in

such a way as to ensure that the transfer of one asset occurs if and only if

the transfer of the other asset also occurs— that is, settlement is conditional.

    5: Anthony Watson is the first – and only – gay person to launch a bank in

the United Kingdom, and currently the only gay Chief Executive of a British

bank.

    6: With the launch of The Bank of London, this is the second billion-dollar

plus financial services company Anthony Watson founded.

    About The Bank of London

    The Bank of London is a leading-edge technology company and the world's

first purpose-built global clearing, agency, and transaction bank. We leverage

our patented technology innovations and differentiated bank capabilities to

lift economies and communities by powering the borderless economic

infrastructure of the future.

    Our clients are banks, clearing houses, digital & traditional asset firms,

governments, financial services companies (from local fintechs to global

institutions), payment networks and non-financial brands seeking to launch

fully compliant financial products and services in-country and across-boarders.

    The Bank of London is a principal clearing bank of the United Kingdom

authorised by the Bank of England's Prudential Regulation Authority and

regulated by the Financial Conduct Authority and the Bank of England's

Prudential Regulatory Authority. Our Financial Services Reference Number is

930379.

    We're headquartered in London, with offices in New York.

    For more information visit online: thebankoflondon.com, or visit us on

twitter and Instagram at: @thebankoflondon.

    About Anthony Watson, Founder & Group Chief Executive of The Bank of London

    Anthony Watson, a veteran of both Wall Street and the City of London and

one of less than a handful of people in the world to successfully launch

financial disrupters in both the US and the UK, has a distinguished career as

an entrepreneur, inventor, philanthropist, and leading Lesbian, Gay, Bisexual &

Transgender ("LGBT") rights advocate.

    Prior to founding The Bank of London, he was one of the pioneers of the

digital asset industry when, as the Founding President & CEO of Uphold

(multi-billion-dollar market cap), he led and built that firm into one of the

world's largest digital asset firms. Previously, he was the Global Chief

Information Officer ("CIO") of Nike Inc., the Managing Director & CIO of

Europe, Middle East and Global Operations of Barclays Bank, and the Senior Vice

President & Global Head of Technology Services for Wells Fargo & Co. Watson

spent his formative years at Microsoft and started his career at First-e

(Europe's first internet bank).

    Formerly, he was the first non-American citizen (and first British citizen)

appointed to the board of directors of GLAAD, the world's largest LGBT media

rights organisation. Anthony has also served as the Chair and Head Judge of The

European Diversity Awards, Europe's largest independent awards that recognise

commitment to equality and diversity. Currently, he's a patron of Diversity

Role Models, a leading UK anti-LGBT bullying charity.

    He was named number 19 in Fortune Magazine's "40 under 40", number 1 in the

Telegraph newspaper's "Top 100 Most Influential LGBT Business Leaders in the

UK", number 4 in the Financial Times "Top 100 Most Influential LGBT Business

Leaders in the World", number 9 in Business Insiders "Top 23 Most Powerful LGBT

Executives in the World", amongst similar honours in Der Spiegel, Economist

magazine, the independent newspaper, the Guardian newspaper, and many others.

    About Harvey Schwartz, Group Chairperson of The Bank of London

    Harvey M. Schwartz is an American business leader, investor, and

philanthropist. For the past 30+ years, Harvey's professional focus has centred

on tackling highly complex financial and business challenges, innovating, and

strengthening financial markets.

    Schwartz joined the Board of Directors of Sofi Technologies Inc, a

mobile-first, American personal finance company, upon its public market debut

in 2021. He also serves on the Board of Directors OneMind, a mental health and

brain research non-profit organisation.

    Schwartz retired from Goldman Sachs Group, Inc. following 20+ distinguished

years at the company where he oversaw sales and trading, finance, technology,

and operations. He completed his tenure as the firm's President and Co-Chief

Operating Officer. He joined Goldman Sachs in 1997 and subsequently held

numerous senior leadership positions including, Chief Financial Officer, Global

Co-Head of the Securities Division, amongst other positions. He additionally

served as a member of the firm's Management Committee and co-headed its Risk

Committee, Steering Committee on Regulatory Reform and Finance Committee. Mr.

Schwartz established the firm's Investment Policy Committee on which he also

served as a member.

    Prior to Goldman Sachs, Harvey spent a decade working at several other

financial firms including at Citicorp from 1990 through 1997. As both an

investor and advisor, he is currently involved in a range of investment and

philanthropic endeavours focused on physical and mental health management and

developing future business leaders, including women and young people seeking a

career in finance. Among his efforts, Harvey founded and supports a pioneering

program for students at Rutgers University that provides them with real-life

financial services experience through internships, professional networking

opportunities and mentorship.

    Fair dealing and Fair use statements

    Certain third party reference or data points in this press-release are used

under the United Kingdom's 'fair dealings' provisions, as governed by Sections

29 and 30 of the Copyright, Designs and Patents Act 1988, and under the United

States 'fair use' provisions, as governed by Section 107 of the Copyright Act.

    Enquiries: Powerscourt

    Andy Smith

    andy.smith@powerscourt-group.com  

    +44(0) 7872 604889

    Ngozi Emeagi

    ngozi.emeagi@powerscourt-group.com  

    +44(0) 7507 651285

    Source:  The Bank of London