biz.Clarency - behind the idea

FT: Jem, we've recently seen Clarency becoming more visible in the international payments arena, and hearing about its core product, biz.Clarency. first of all, what is biz.Clarency?

JS: (laughs) That's a good question, how long have you got? It's really just a name tag to make it easier to talk about what it does. And what it does is make it a whole lot easier, quicker and cheaper to make compliant international payments. It's kind of an assembly of ingredients to do that.

FT: So are you innovators?

JS: In some areas, yes, of course, but our historical approach has been more solution-based than innovation-grabbing. We’ve made cautious use of technologies where there’s a clear business case, but never been swayed by flavour-of-the-hour trends

FT: How has this changed over the past few years?

JS: I’m not entirely sure that it has. Our latest project is to connect two distinct, next-generation blockchain technologies for mutual verification of immutability without breaching jurisdictional privacy requirements. That's pretty innovative, and so is the way we're creating an auditable movie of every action throughout every transaction. I could ramble on (in fact, probably will) about new methods of end-to-end transparency. It's all innovation, but it's there for exactly the same reason as the manual MLRO decisions that they fuel. We choose the best way of solving a task, not the latest in-fashion hi-techery.

FT: Is there anything that has created a culture of change inside the company?

JS: I think we’ve always had a culture of change. The business we’re running today is very different from the one we operated twelve months ago. It’s what’s allowed us to adapt to the COVID-19 world and grow strongly through a crisis that’s destroyed far too many good companies.

FT: What FinTech ideas have been implemented?

JS: Our deployment of a new technology blockchain was probably the most visible. The evidential audit trail it offers has strong advantages for accountability. That said, we researched the offerings with great care before we settled on InterlockLedger’s solution. Traditional blockchain has serious shortcomings in its flexibility and – as it turned out earlier this year – its security. Those had to be resolved before we could deliver the vision of faster, easier and safer global trade.

FT: What benefits have these brought?

JS: That’s an interesting question. A direct benefit has been the intended immutable audit trail and strong security. But there’s been another, less expected but equally important gain. In working with a willing blockchain partner we’ve been able to place the evidential data layer outside the core platform processes. This meant that, when the opportunity presented to integrate with China’s forthcoming government-approved financial blockchain, we were able to plot an easy course to implement the same together-but-separate architecture. This gives all parties the security and confidentiality they want without sacrificing the transparency required for safe trade.

FT: Do you see any other industry challenges on the horizon?

JS: The permanent challenge is a willingness to evolve and rethink attitudes. While the financial institutions continue to see compliance as a no-blame tool, the world will continue to shrink. Take Africa’s as an example. It's emerging as an economic powerhouse, which is fantastic, but its progress could be bulldozed by inaccessibility to correspondent banking and cross-border mistrust. Existing banking attitudes and outdated compliance criteria won't solve that. The wrongdoers will continue to hide among the mountains of false-positives generated by compliance systems that do no more than check boxes. Our biggest industry challenge is to embrace a culture change and address the problems instead of simply ensuring we’re not to blame.

FT: Can these challenges be aided by FinTech?

JS: FinTech can provide solutions, Fintechs may actually be the solution. They’re driven by commercial opportunity, while traditional banks are motivated by avoidance of risk. Look at the vast investments the banks have made in compliance, most of it in raising staffing levels, all to bolster up a system that's no longer fit for purpose. So the great innovations are coming from small, visionary companies who are bold enough to explore solutions that question and often threaten established structures.

FT: So how would you sum up where this all leads?

JS: 2020 showed us changes that in many ways were as profound as those experienced in and after two world wars. We’ve been brought face-to-face with the fragility of our civilised business world. Some of the business casualties couldn’t survive whatever they did, but many collapsed – and will continue to collapse – because they failed to adapt. Whatever happens to the world, I beleive that trade will be the core of our survival for as long as our race survives. We have to ride the changes and be ready to change our thinking.

FT: So do you think international finance will meet the challenge?

I don't know, but I know that it has no choice. Evolution creates casualties. The monolithic financial bodies have to learn to respond like the new, fast-moving business organisms that are beginning to surround them. They have to work with them, or they'll leave their bones to be found in a glacier.