Money20/20: SMEs 'must be supported', ClearBank CEO says

FinTech Magazine catches up with ClearBank CEO Charles McManus at Money20/20 Europe to discuss the current fragilities and uncertainties in the global banking industry, why it is critical to support SMEs in different markets, and why events such as Money20/20 are great for fostering partnerships across the broad spectrum of financial services. 

What do you make of the security of the current global banking scene, with Silicon Valley Bank (SVB) and First Republic Bank falling by the wayside?

CM: I've been in banking all my life. I sat at the court of the Bank of England when Nick Leeson blew up Barings Bank and the £683m (US$869m) loss he caused in Singapore had to be cleared up. I lived through the MBS crisis when I was at Royal Bank of Canada in terms of debt and the evils of debt that corrupted the world. And here we are again in 2023 in more trouble for banks globally.

There are two things that kill banks; one is liquidity, or absence of it, as those people queuing outside Northern Rock branches to get their cash out in 2007 know about all too well.  And the other, of course, is losses and credit. If you don't get those two right, a bank will end up in trouble, which is what we’re seeing today with SVB and First Republic. 

How important is it to support SMEs during the current macroeconomic climate? 

CM: Being from the UK, there's not enough growth in the UK economy at the moment. Inflation is far too high. Interest rates have got to go higher to keep pace. Though caused by the headwinds of surviving COVID-19 and everything else happening politically, it may be that this leads us to having to survive again should we enter a recession.Look at inflation rates and the cost base in relation to SMEs and spending being squeezed, and then add on to it all of the friction in relation to Europe and, and exporting goods. The challenges are everywhere if you’re trying to merely survive as a business.  

I find it heartbreaking to hear that every day in the UK, a pub or a restaurant is going bust because of food inflation. All of these are good businesses but are currently unable to pass on their cost base to consumers and execute on quality products.

We know the UK economy needs growth so the Government can actually then fund all the services they need, from the NHS to social care and all of that. So growth is what is essential, and SMEs are the foundation of that growth. They are the backbone of our economy and must be supported. 

How important are events like Money20/20 for you in bringing the industry together?

CM: I've had a fantastic few days here in terms of meeting existing clients, but more importantly new clients; people wanting to get stuff done, executing rather than just talking about it. That gives me tremendous energy and that's what ClearBank is all about. And being in Europe, in Amsterdam, we've been talking to several potential customers that we want to sign up to expand our European footprint. 

So hopefully this will come, and we hope for the same in the US but it takes time to do these things properly. We want to operate at the very highest levels of regulation and the highest level for our customers as well. We want to deal with the best customers and the best-surviving businesses, helping out some business models that perhaps haven’t made it so far, those who are not profitable or sustainable. That's what ClearBank is all about.