As a fintech, you know that launching or extending your current payment services is far from simple. It means navigating different account types, account structures, and multi-currency support, as well as payment and clearing schemes, each with its own complexities and quirks.  

Building these accounts and payment scheme connectivity requires substantial investment in technology, compliance, and personnel. What’s more, the ongoing maintenance and upgrading of these systems just to keep up with scheme rules and regulatory requirements can escalate your operational costs even further. Instead of focusing on user experience and scaling, you would be pouring resources into background infrastructure. 

This is where agency banking comes in. Also known as indirect scheme access, the agency banking model provides firms with a way to offer accounts and payment services to their customers without the resources and costs of joining a payment scheme directly.  

In this article, we’ll cover: 

• What is agency banking, and how can it help you quickly launch near real-time payment products? 
• How can you implement agency banking?  
• Examples of agency banking in action 
• What to consider when choosing the right agency banking provider 
• Why partner with ClearBank for agency banking or embedded banking services 
• Case study: How ONE.io accessed Faster Payments and virtual customer-segregated accounts with ClearBank 

ClearBank is a B2B clearing and settlement bank that offers agency banking and embedded banking services. To connect to your chosen payment schemes right away, get in touch with our team. 

Agency banking is a model in which a regulated bank or EMI provides the underlying banking and payment infrastructure, enabling fintechs to offer accounts and near-real-time payments without holding a banking licence. 

The fintech acts as an appointed agent, owning the customer interface and product experience, while the partner bank remains responsible for scheme access, safeguarding, and regulatory compliance. This structure enables faster go-to-market with full access to payment rails, without the cost or complexity of direct participation. 

Under this arrangement, regulatory responsibilities are split between the two parties: 

• You remain in charge of customer onboarding and KYC, ongoing customer due diligence, and transaction monitoring within the platform. 
• The partner bank is responsible for compliance with payment scheme rules, as well as settlement and, if required, safeguarding of customer funds. 

There are several advantages of agency banking for fintech companies: 

• It allows you to offer banking services without becoming a fully licensed bank or a direct member of a payment scheme yourself, which can be an intensive and prohibitively costly process. If any changes are needed to maintain or update scheme access, the partner bank handles them on its end and cascades the change to you and other firms in the agent network (usually via an API) so that customers remain unaffected. This alleviates operational and financial overhead. 
• You enjoy faster time-to-market, as partnering with an agency bank is a far quicker route to offering payment products than obtaining payment scheme access yourself. Rather than undergo a lengthy application process that can take over a year and attend annual attestations to prove resilience and regulatory compliance, you can plug into an agency bank’s API, pay a monthly access fee, and be up and running in about one month. 
• You gain access to international markets without the high costs of direct access to multiple payment schemes. For example, if you’re a UK firm looking to access SEPA or TARGET2 (T2), partnering with an agency bank that supports all four UK schemes and EU payment rails is a cost-effective solution that promotes long-term scalability. 
• You get to increase customer satisfaction through better and faster user experience. Most agency banking services today include providing customer accounts and access to payment rails such as the Faster Payment System (FPS) in the UK or SEPA Instant in the eurozone. As a result, you can focus your resources on innovation and user experience enhancements while relying on your partner bank's established infrastructure and regulatory compliance standards. 

Agency banking provides indirect access to payment schemes. Instead of joining schemes like Faster Payments or Bacs directly, firms connect via a regulated bank that already holds direct membership. 

The agency bank maintains scheme participation, compliance, and regulatory accountability, while the fintech accesses the payment rails contractually. This significantly reduces onboarding complexity and regulatory burden, enabling a faster launch and easier scaling without requiring direct scheme participation. 

With the indirect model, the onboarding process for participants is more straightforward because the agency bank handles the regulatory and compliance requirements associated with direct scheme access. This offers firms a flexible and accessible avenue for growth, especially when they are just getting started. 

To gain indirect scheme access through an agency bank, you can partner with: 

1. A traditional high-street bank: With mature compliance frameworks and high credibility, many of these banks still rely on legacy infrastructure. This means integrations are complicated due to a lack of APIs, or that payments are processed in batches rather than in real time. This results in a poor user experience for the fintech customer base, which expects fast, flexible, and real-time interaction as standard. 

   These issues have been highlighted in our recent research: How well are fintechs served by banks? The state of agency banking in the UK and Europe. 
    

2. An API-first bank or Electronic Money Institution (EMI): These firms offer banking services to third parties via an API (Application Programming Interface), which means you can embed financial products directly into your platform, offer near real-time payment processing, and scale without the constraints of legacy systems.  

• An EMI that offers e-money accounts to customers needs access to Faster Payments and Bacs so that customers can transfer funds between accounts. As a result, they partner with an agency bank for the necessary payment scheme connectivity. 
• A fintech expanding into new markets requires access to local payment rails and support for multiple currencies. However, they don’t want to deal with the burden of several direct payment scheme memberships, and so they outsource scheme participation to one bank that connects to all the schemes they need. 
• An open banking provider requires access to Faster Payments to initiate near-real-time payment transfers, which is crucial for delivering the instant payment experiences expected from open banking use cases.  
• A digital bank that is already a direct participant in some payment schemes (such as Faster Payments and Bacs) requires quick access to an additional scheme (such as CHAPS) for higher-value purchases. 
• A regulated digital asset exchange platform needs stable, compliant access to UK payment rails to process GBP payments. An example of this is Coinbase, which uses agency banking to access Faster Payments, speed up deposit and withdrawal processing, and automate the reconciliation of customer funds. 

Note: While agency banking services tend to be limited to bank accounts and payment schemes, another model offers a broader range of banking services: Banking as a Service (BaaS) or, as we refer to it at ClearBank, embedded banking. 

With embedded banking, you can provide an account directly to a consumer or business, as well as payment services like a card or wallet. This model also allows you to offer FSCS-protected, interest-bearing accounts that help differentiate your product and increase customer retention. 

To find out more about how we can support you through agency banking and embedded banking models, reach out to ClearBank. 

Before partnering with an agency bank or an EMI, it’s essential to understand whether their processes run on legacy systems or if you can embed the solution into your product via APIs, as this impacts payment processing speed and scaling plans. 

There are several other questions worth asking as well: 

Not all providers support the same payment schemes, which is why it’s important to think not just about what access you require today, but what you’ll likely need as you scale. 

Most firms need access to Faster Payments at a minimum, as near-real-time payments between UK bank accounts are now the standard expectation for UK customers.  

Depending on your use cases, you may also require access to: 

• Bacs: Handles both credit transfers and direct debits for both bulk and regular payments. 
• CHAPS: Facilitates high-value, urgent payments, though less commonly used in agency banking due to its higher cost. 
• Cheques and Credit Clearing: Supports the processing and settlement of cheque payments and certain paper-based credits. 

If you’re planning to scale internationally, the ideal agency banking provider should support EU payment rails as well as UK schemes. While you could add a provider for EU access later, this would introduce additional time and complexity, potentially delaying product launches. 

Building on a provider that already has the access you need can save those extra resources.  

For example, you’ll probably be looking for: 

• SEPA Credit Transfer: Generally used for one-off transfers as Payment Service Providers (PSPs) move funds from one bank account to another within the SEPA network. 
• SEPA Instant Credit Transfer: Supports instant bank-to-bank payments across the eurozone. 
• T2 (TARGET2): The real-time gross settlement (RTGS) system that facilitates high-value euro payments. 

Agency banking services extend beyond transactions (that simply move money) to account offerings that enable you to hold money, whether your own or that of your customers.  

Based on what you need, you may want different types of accounts, such as: 

• Operating accounts: where you hold your own business's operational funds. 
• Customer segregated accounts: where your customers' accounts sit alongside your operating accounts, keeping your customers' funds separate from your own. 
• Client money accounts: accounts that let your business receive and hold money for (or on behalf of) your customers. These accounts separate your customers' CASS 7 investment funds from your own operating accounts. 
• Multi-currency accounts: holding multiple currencies within one account, whether operating, segregated or client money. 

Agency firms also offer different account structures, either ‘real’ or ‘virtual’. While a real account holds funds, a virtual account is essentially a ledger that shows transactions against a real account.  

This means you can hold customer funds in virtual accounts that function as pots within a single real account, centralising your firm’s money while maintaining customer segregation. 

Read more: Real accounts vs virtual accounts: how to choose the best option for your business

Scheme access is but one part of the picture. To scale without having to deplatform or bolt on additional providers, you should consider a few other key factors: 

• Is the platform built on modern, scalable infrastructure that can handle high transaction volumes without degrading in performance?  
• Is availability consistent during peak periods? 

And if you enter a new market, can the provider support: 

• Both domestic and international payment schemes 
• Multi-currency accounts  
• Cross-border payment flows 
• Local clearing and settlement in different regions? 

What’s more, there may come a point when you want to offer more advanced banking features like interest-bearing, FSCS-protected accounts. Is this something your current agency banking provider can support, or would you need to switch platforms once you outgrow your current model?  

At ClearBank, many firms have started working with us through agency banking for indirect scheme access before progressing into embedded banking for deeper banking functionality. If this evolution is on the cards for you, factor it in when choosing the right agency partner

In a market where speed is crucial, any downtime or delay in settlement can directly affect your customer experience and reputation. It makes sense that you need a provider with high availability. 

Not only that, but security incidents are a constant threat to your regulatory standing, so robust security controls are essential. 

Here are some questions to ask during conversations with the sales team: 

• How do you communicate downtime? For example, do you provide specific reasons (e.g., would you inform me of a scheduled maintenance in advance)? 
• What was your uptime in the past half a year? 
• Do you display real-time information on the client portal? 
• What are your security policies? 
• Do you use a security programme that complies with a recognised standard? Has it been independently audited by a third party? 

Read more in our buyer’s guide: Stability and security 

ClearBank is a UK-authorised clearing bank built to support fintechs, financial institutions, and corporates looking to embed financial services into their products – all without the operational and regulatory burdens of becoming a bank or a direct payment scheme participant.  

With a flexible API that supports transaction volumes of X, you can scale your product without upgrading your infrastructure, and our Information Security Risk (ISR) management structure is designed to identify and limit the risk of exposure. 

Here are a few reasons companies like Oxbury Bank and Allica Bank work with us: 

For fintechs, an intuitive and fast customer experience is one of the main USPs. Without it, it’s easy to lose competitive advantage against established banks, which is why launching quickly is incredibly important. 

But if you were to become a direct payment scheme participant, the application process, technical integrations, ongoing attestations, and compliance can take up over a year of work. And by the end, you’ll have either incomplete scheme coverage or you’ll juggle multiple direct access memberships.  

Plus, scheme rules or certification and infrastructure requirements can and do change: as a direct member, you’ll need to stay on top of these updates and implement them. This means increasing headcount and possibly opening a new department, which can derail your existing roadmaps and ultimately slow down scaling. 

By partnering with ClearBank, you can gain indirect access to all three UK payment schemes and EU rails in weeks rather than months or years. If any scheme updates are required, we have the resources to implement them. Regulatory oversight, compliance with scheme rules, and safeguarding of funds are our responsibility. All our client funds are held securely at the Bank of England and are available 24/7. 

You can also use our different account structures to fit specific use cases, including operating accounts, customer-segregated accounts, multi-currency accounts, and client money accounts. These can be real or virtual, depending on your needs. 

Customers expect fast, transparent payments: if funds are debited from their bank account, they want to be able to track the transaction immediately. 

However, many traditional banks still rely on legacy infrastructure that uses batch processing, meaning all transactions are processed together as a batch every few hours. This means status updates can be delayed, and customers feel more uncertainty about their payments, decreasing their overall trust in your service. 

With our API-first, cloud-native infrastructure, you can eliminate this issue: thanks to our straight-through processing capabilities, you can surface near-instant data sent directly from the payment schemes to you via webhooks. This way, your customers get to see all updates in near real time. 

And with Confirmation of Payee, your customers always know their money is going to the right place. This provides an added sense of security and may reduce the number of support tickets. 

All this happens within your own interface. While you remain in control of the customer experience, including branding, communication style, and flow logic, we take responsibility for payment scheme access and regulatory compliance in the background.  

While you build the integration, your team can test our API in a simulation environment to reduce any chances of errors or delays once you go live. 

Read more: Explore our API

Agency banking is a good fit for payments-led use cases. As you scale your product, though, there may come a point when you’re ready to offer more advanced banking capabilities.   

Once customers hold larger balances, for example, they might expect a certain level of protection, as well as access to interest-bearing accounts. If your solution doesn’t meet these expectations, it will likely remain a transit station for your customers’ funds – or be used less and less frequently as competitors roll out more value-added services. 

The ability to offer instant access savings accounts, for example, can boost customer engagement: take the UK fintech Chip, which started their collaboration with us through agency banking before evolving into our embedded banking model. 

With embedded banking, Chip was now able to offer FSCS-protected, interest-bearing deposit accounts where eligible deposits were protected up to £120,000 under the UK’s deposit guarantee scheme.  

Through this model, Chip introduced instant access savings accounts that served 200k customers with £2.7bn in deposits, as well as a Flexible Cash ISA, which achieved more than 85k accounts and £1.3bn in deposits in the first five months of availability (as reported in July 2024). 

Embedded banking also allows you to participate in our shared revenue agreement: the interest generated on customer balances is split between the end-customer as a rate, us for providing the necessary infrastructure and licensing as the intermediary, and you as a recurring source of revenue.

ONE.io is a fintech that provides an end-to-end financial services solution to corporate clients: through one onboarding process, clients can access a variety of products, including multi-currency IBANs, 24/7 digital trading, and access to payment rails like Faster Payments, SEPA, SWIFT, and CHAPS.  

When ONE.io sought to gain indirect access to the Faster Payments scheme, they needed a provider with a strong reputation, seamless payment processes, fast and secure technology, and the ability to accommodate long-term growth.  

ClearBank fit the bill: “ClearBank excels at agency banking, with its accounts and building and maintaining FPS connectivity. We appreciated that it would be much faster working with ClearBank compared to if we'd tried to do it ourselves,” said Emma Campbell, ONE.io’s Head of Banking. 

Through the agency banking partnership, ONE.io was able to: 

• Quickly connect to the UK Faster Payment System 
• Deliver virtual customer-segregated accounts, making it easier to support customers without the operational overhead of managing thousands of real individual accounts 
• Implement Confirmation of Payee (CoP) to enhance customers’ sense of security thanks to near real-time verification of the account they are paying into 
• Swiftly resolve any payment investigations 24/7 through the ClearBank client portal 
• Evolve with the help of a dedicated relationship manager 

Read the full case study: ONE.io collaborates with ClearBank to deliver more efficient payment services 

Agency banking offers a fast way to launch and scale your payment products without incurring the costs and complexity of becoming a direct payment scheme participant.  

ClearBank enables this through its API-first infrastructure that powers near real-time payment processing, connections to all the core UK and EU payment schemes, high-volume transactions, and models like embedded banking, which is designed to support your scaling journey as your financial services evolve. 

To learn more about how we can help you implement agency banking and accelerate your time to market, get in touch.