How Banking Circle powers the payments world

In the global digital economy, payments are expected to be instant, invisible, and infallible. But behind every seamless transaction is an engine of immense complexity. At Money 20/20 Europe, Bobsguide spoke with Michael Boel, Director and Head of Clearing and Product Execution at Banking Circle, to understand the immense technical and regulatory “heavy lifting” required to make global commerce run smoothly.

With over a decade of experience at the heart of this infrastructure, Boel provides a candid look at the forces shaping the future of clearing and settlement.

Meeting the 24/7 Mandate

The primary engine of innovation, according to Boel, is the consumer.

As commerce has become borderless, the expectation for payments to keep pace is absolute. This has created a monumental challenge for the institutions managing the flow of money.

“The whole availability and the whole stability is a big, big thing for us,” Boel stresses. “We cannot have maintenance. There is no such thing anymore. It’s 24/7, 365.” This mandate requires a radical departure from traditional banking operations. Banking Circle achieves this through an active-active infrastructure, running services across multiple data centers to ensure there is never a single point of failure. It’s a technical gauntlet that many legacy institutions struggle to run.

This “always-on” reality creates a second, equally critical challenge: liquidity. “We need to be ultra-liquid,” Boel states, distinguishing Banking Circle’s model from traditional banks. “If our clients want the money here, we cannot have the deposits for a billion and then borrow out 900 million.” By remaining “cash long” and mitigating risk by holding funds directly with central banks like the Bank of England and the ECB, they ensure the capital is always available to meet the demands of a 24/7 payment cycle.

The “Circle of Life” for Payment Providers

This robust infrastructure allows Banking Circle to address a key evolution in the market: the rise of the fintechs they serve. Boel describes a “circle of life” where today’s startups become tomorrow’s household names, and their needs change dramatically along the way.

This journey is driving the demand for Agency Banking. Initially, a young Payment Service Provider (PSP) simply needs access to the payment rails. But as they grow, brand identity becomes paramount.

“They want to be identified,” Boel notes. “When you key in an IBAN… they don’t want to see the name of Banking Circle or Barclays pop up. They want to see their own name.” Agency banking provides this, allowing fintechs to issue their own IBANs and BICs, putting their brand front-and-center. This delivers not only commercial value but also the transparency now demanded by regulators to combat issues like APP fraud.

Building Bridges in a Fragmented World

Despite the drive for standardization, the payments landscape remains stubbornly local. “Every country is the same, but a little bit different,” Boel admits. This makes communicating the value proposition a constant challenge. Germany’s reliance on direct debits is different from the UK’s mix of Bacs and Faster Payments, and each requires a unique approach.

Ultimately, Boel believes the value of this complex work is proven by the market itself. “Some of our clients are our greatest ambassadors,” he concludes.

As other players see what is possible through Banking Circle’s infrastructure, they are drawn in, creating a ripple effect. It’s a testament to the fact that even if the engine is invisible, its performance is clear for all to see.