Challenger bank Tide has partnered with ClearBank to bid for a share of the Royal Bank of Scotland’s £775 million fund aimed at increasing competition in Britain’s business banking sector.
Tide and ClearBank, the first clearing bank to launch in Britain for 250 years, have applied for a grant worth up to £120 million from Pool A of the Capability and Innovation Fund that forms part of RBS’s alternative remedies package.
If successful, the grant will allow Tide and ClearBank to develop advanced business current accounts and products for small and medium-sized enterprises (SMEs) in the UK.
RBS’s alternative remedies package is part of conditions attached to its £45 billion Government bailout a decade ago at the height of the financial crisis, with the cash being distributed by the Banking Competition Remedies body.
Winners of the first round of financial awards are expected to be announced in February.
The companies said the bid blends ClearBank’s payments infrastructure and Tide’s digital banking platform.
A number of challenger banks have launched in recent years with the aim of taking market share from the traditional high-street lenders and are looking to expand their offering to small businesses.
Tide chief executive Oliver Prill said RBS’s alternative remedies package is a “golden opportunity” to inject competition and innovation into the business banking market and the grant will allow the company “to go even further, faster, for UK SMEs”.
He said it would be a “mistake to give all the top prizes in the RBS alternative remedies package to high-street banks to do ‘more of the same with’ and upgrade legacy systems. As any investor knows, it’s important to diversify your portfolio and we are the only player with an exclusive focus on SMEs, a cutting-edge technology stack and no costly overheads like branches”.
“Tide has already demonstrated its credibility by being the fastest growing business banking service provider in the UK and I very much hope the competition judges, when deciding who to award the grants to, recognise we are not only leading innovation but are a safe pair of hands.”
Tide’s business accounts do not have monthly, weekly or annual fees, or card usage fees, but costs are incurred when transferring funds from non-Tide accounts, ATM use and cash deposits at the post office.
