The Bank of London Launches Today as the World's First Purpose-built Global Clearing, Agency & Transaction Bank
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
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