The financial system has a clearing problem, and it’s not about broken technology. It’s about who the technology was built to serve, and more importantly, who it wasn’t.

Lorum Co-Founder and CEO George Davis made that point in a conversation with PYMNTS CEO Karen Webster, explaining how the current clearing and settlement ecosystem was designed around a set of participants and incentives that no longer reflect the full range of institutions that depend on it. Payment service providers, FinTechs and mid-market financial institutions are operating in that system today, but they’re accessing it indirectly, through chains of intermediaries shaped by lending priorities rather than by the actual needs of money movement.

The result is a structure that works well for the largest banks and poorly for nearly everyone beneath them. Institutions that need predictable, real-time treasury and trade capabilities find themselves reliant on correspondent relationships that weren’t built with that goal in mind. And because the incentives at the top of that chain are tied to deposits and lending rather than the efficient movement of funds, the gap doesn’t close on its own.

The Incentive Problem at the Heart of Clearing

Davis described the core distortion plainly. Large correspondent banks have historically offered payments at minimal cost because their business model depends on capturing the underlying deposit and lending against it. They’re not in the business of moving money efficiently. They’re in the business of holding it.

The customer needs it to arrive quickly and on a known schedule. Those two interests aren’t aligned, and that misalignment has been baked into the infrastructure that PSPs and FinTechs are now being asked to build on top of.

“They’re offering payments for free or as close to free as they can possibly go because they need to monetize the underlying deposit. So they want more of your volume, more of your money going through their platform so they can lend it and make their money based off of that,” Davis emphasized. That model made sense when the ecosystem was smaller. It doesn’t scale to meet what the market needs today.

Where PSPs and FinTechs Get Left Behind

For PSPs and FinTechs building cross-border payment services, that misalignment creates friction that’s hard to engineer around. Prefunding requirements scatter liquidity across multiple accounts and counterparties. Settlement visibility is limited. The infrastructure that’s available to them is whatever the larger institutions were willing to share, priced and configured to support someone else’s business model.

Mid-sized banks, platforms and payment providers don’t have direct access to central clearing systems, so they rely on intermediary chains. Each link in that chain adds complexity, reduces visibility into how funds are positioned, and introduces uncertainty about when settlement will actually occur. For treasury teams trying to manage liquidity in real time, that uncertainty is a real operational cost.

Davis noted that access to dollar clearing remains uneven even outside the U.S. system, and that established institutions can still struggle to secure reliable correspondent services. The problem isn’t confined to smaller players or emerging markets. It’s structural.

What a Trust Bank Charter Actually Changes

Lorum’s application for a U.S. national trust bank charter is designed to change where it sits in that chain. Direct access to central clearing systems would allow the firm to operate closer to where settlement actually occurs, cutting out the intermediary layers that add cost and reduce transparency. The economic model shifts along with it.

Rather than treating payments as a loss leader to fund lending revenue, Lorum’s model is built around charging for clearing, custody and treasury services as standalone capabilities. Davis described Lorum’s intent as functioning as a “specialized correspondent,” one whose incentives are aligned with how its customers actually use the system rather than with how much of their deposits it can hold.

In practice, that means PSPs and FinTechs that work with Lorum could reduce their prefunding requirements, improve visibility into liquidity positions and redeploy funds more quickly after settlement. Those aren’t incremental improvements. For institutions operating cross-border payment services at scale, they’re foundational to what a modern treasury function needs to look like.

Building for the Institutions That Got Left Out

Davis described the target market as institutions that sit below the largest global banks but require comparable capabilities. That’s a significant portion of the market. It includes PSPs, FinTechs, regional banks and nonbank financial institutions that need to move money across borders reliably and build their own payment products on infrastructure they can actually depend on.

Webster made the comparison to Stripe, new payments infrastructure built for a new way of transacting using mobile devices and apps. The Stripe comparison that Webster raised in the conversation is useful here. The analogy isn’t about payment processing. It’s about what happens when you abstract access to infrastructure that was previously only available through relationships with large incumbents. Stripe didn’t fix payments by replacing the card networks. It made them more accessible to developers and businesses that couldn’t previously reach them. Lorum is making the same argument about clearing.

The expansion of financial platforms, marketplaces and nonbank institutions has increased demand for clearing and treasury services significantly over the past decade. The infrastructure hasn’t expanded at the same pace, and what’s available has been distributed unevenly. That’s the gap Lorum is positioning itself to fill, initially for institutions that need global clearing capabilities but haven’t been able to access them directly.

Clearing Stays Central No Matter How Payments Evolve

On the question of new payment rails and digital assets, Davis was clear about what changes and what doesn’t. Whether a transaction enters the system via a stablecoin, a tokenized deposit or a Swift message, clearing and settlement remain the foundation. The path to real-time, global treasury capability runs through better access to central bank systems, not around them.

Lorum’s model, as Davis described it, is agnostic to how a transaction enters the system. “Whether they enter that ecosystem via a stablecoin or a tokenized deposit or whether they enter it via a Swift payment, we’re agnostic to that because our job is to give you the best access to clear over those direct central bank systems everywhere in the world that we operate and give you accounts that are interoperable.”

That’s a meaningful position to stake out as the payments landscape continues to fragment. New instruments and new rails are multiplying, but they all eventually need to settle somewhere. The institutions that control access to that settlement layer hold a structural advantage, and right now that advantage is concentrated at the top of the correspondent banking hierarchy.

The Opportunity Is in Getting the Incentives Right

The opportunity Lorum is pursuing isn’t built on the premise that the current system is broken. Davis acknowledged it functions. The premise is that it hasn’t scaled to serve the full range of institutions that need it, and that the incentives governing how it operates have kept that gap in place.

“The system works really, really well,” Davis told Webster. “It’s just that the incentives and the participants are wrong. And so the idea for us really is, can we build the correctly incentivized participant everywhere in the world.”