Financial services has seen a great deal of innovation over the past decade, but for Sean Kiernan, founder and CEO of aspiring digital merchant bank Greengage, it should be more than tinkering with the system.
Greengage aims to offer underserved SMEs, crypto companies and high net worth individuals access to banking services and an open platform of products including loans.
“I think, post-Brexit, the country has to innovate, and the next big thing in finance is to change the plumbing of financial settlements,” he says. “Much of the current settlement infrastructure involves several actors taking a cut from every part of the payment process. But you can streamline the process and make a much more cost-effective structure for transacting not just in payments, but across the full suite of financial products.”
The other issue he hopes to address is a recurring one: even better access to money for SMEs, so they have more choice – something the British Business Bank was created to tackle in 2014. “We are trying to focus on the SME market specifically because I think there’s a huge opportunity for a start-up like us to operate in that space.”
Leap of faith
Four years ago, Kiernan left his “relatively well-paid” job as COO of Falcon Private Bank – an office he had helped establish through a banking application for Clariden Leu in London before it was sold to Falcon in 2012.
“It was a bit scary,” he says. “I had set up a bank, but never worked on a start-up before, let alone from my kitchen table. Previously, I’d the backing of Credit Suisse’s balance sheet, as it owned Clariden Leu. It was a very different experience to having the backing of a big bank’s balance sheet, but it was a great learning experience to set up a business from scratch.”
Greengage has had four tranches of funding totalling £6m to date. The largest raise was in August last year, when fintech IOVLabs, which develops blockchain technologies, invested £2.5m. A month later, a further £300,000 was invested by the Gibraltar-based, Acquis-listed venture incubator Coinsilium, in a deal that valued Greengage at £27.3m. Since then, Greengage has moved into profitability, although that is not yet recurring.
“When I set up the business, others were thinking about it and looking into it. We’re not trying to just emulate what the big banks are doing with tech houses, but doing our own thing. Obviously, for the tech houses, the power of potentially having thousands of bank customers is enormous. But we need to be able to plug into new things at a more effective price point, to deliver what we want for SMEs.”
Greengage launched e-money accounts in May 2022. As a broker, it has facilitated several hundred million in wholesale lending volume against crypto, in partnership with a family office. Greengage has about 50 big clients, but Kiernan expects that e-money will attract a much larger number of smaller clients.
When it comes to tech, Kiernan says his team is not looking to build everything in-house because it could cost hundreds of millions of pounds: “VCs, when they deploy money, are looking for a ‘tech-first’ firm. Having built a bank myself, and worked in banking for a long time, I saw that you could buy tech stacks that cost a fortune, but which offer limited flexibility. The focus has been to build an API- and cloud-first technology platform, which stitched different systems together – with much built on the likes of Salesforce, Azure and Enterprise.” This model should allow Greengage to focus on delivering products and services, including those from third parties, as its business develops.
Greengage has been focused on launching e-money banking services, so plans to apply for a banking licence are currently on the back burner. Greengage’s B2B lending facilitation business falls outside of the FCA regulatory perimeter. “For the e-money business, we’re launching as a distribution agent of Modulr FS and will leverage its FCA permissions,” says Kiernan. “Revolut, for instance, also uses Modulr for its back-end – it is the digital standard for business payments.”
Kiernan says he was pleased that John Glen MP, Economic Secretary to the Treasury, said the UK was open for crypto business in his keynote speech to the Innovate Finance global summit at the beginning of April.
“The tone is very different from the Bank of England. The same day, it was warning about the speculative nature of cryptocurrency. Of course, caution should be exercised. But think what the underlying technologies can potentially open up for innovation and funding, and how the UK can lead the way in that.”
Team talk
Greengage now has more than 30 staff, approaching £2m in revenue and is beginning to turn a profit. Iain Watson is chief of staff; Mark Pickering is chief technology officer; Glenn Palmer is client operations officer; Sally Riggings head of compliance; Chris Bacon development director; Yang Yu financial controller; and James Tewes is chief information security officer.
The non-executive directors are June Aitken, who has been an MD at UBS Investment Bank; Rosalyn Breedy, who is head of funds and private wealth at law firm Simons Muirhead Burton; and Joey Garcia, who is a partner at law firm Isolas in Gibraltar.
Greengage recently acquired tech consultancy Silver Lined Solutions (now Greengage Solutions): “As well as historically working for us, it has built a lot of tech for financial services companies, including the likes of St James’s Place and some other VC houses. We’ve acquired it to in-source it as our tech house. We can get additional revenue streams and, at the same time, get exposure to interesting financial services firms, including those investing in financial services tech with an eye on the future. Down the road, we can systematise what we’ve built through them for ourselves and maybe offer our software-as-a-service solutions.”
Kiernan says the first step is to create a strong client base for Greengage, although funding transactions for SMEs over the longer term is the aim: “We are building a viable business in the crypto world. I think most of us can see the pain points in the traditional banking systems. If we can create a platform to bridge the gap with these innovative solutions opening up in digital assets, as well as navigating traditional capital and liquidity options for SMEs, we can open doors to funding their ambitions, matching whatever solutions may be best for their needs. This is digital merchant banking.”
Swiss roles: Kiernan’s global journey
Originally from the US, Kiernan moved to Europe to undertake an MBA at the University of St Gallen, in the German-speaking region of Switzerland. He’d already earned a degree in foreign service, science, technology and international affairs at Georgetown University in Washington DC. He took the decision to stay in Europe and so joined Zurich Insurance in its home city as a consultant. His work included due diligence, financial modelling and post-merger integration for international acquisitions.
In 2009, Kiernan joined Clariden Leu, the Swiss private bank owned by Credit Suisse. He remained in Zurich, in his initial role in corporate development, working on M&A. In 2010, he moved to London to upgrade the UK operations of Clariden Leu – effectively to set it up with a UK banking licence.
“I wanted to get my hands dirty in a line role. You don’t realise how all the pieces of the puzzle fit together day to day – the interface of credit and risk, the back office and sales – neither as a consultant nor particularly when you are in a line role in a big bank.
Credit Suisse spun out Clariden Leu’s London-based UK operations in a 2012 sale to Falcon Private Bank, a Swiss private bank owned by Abu Dhabi fund Aabar Investments, which in turn is owned by the International Petroleum Investment Company – effectively an Abu Dhabi sovereign wealth fund.
The value of the deal was undisclosed, but the London operations, which became Falcon Private Wealth, held more than $2bn in assets. In 2014, Kiernan was promoted to COO.
“Falcon Private Bank was one of the first in the world to do cryptocurrency and because I was ‘crypto friendly’, I ended up in more of a front-office role. It was pretty early days, pretty Wild West, and Bitcoin was just hitting the public consciousness.”
That was when Kiernan thought of starting his own fintech company – Greengage. “I’d built a bank before, so thought, ‘why don’t I go and build another firm that’s crypto-friendly and focused on corporates rather than solely ultra-high net worth individuals?’ In the four years since founding Greengage, although we don’t have a banking licence as yet, we’ve built a viable business, with revenues both in technology services and as an introducing broker.”