Tide, a UK-based SME challenger banking, announced on Monday it has formed a new partnership with ClearBank to help transform the UK SME banking market.
Tide reported that through its support, ClearBank has applied for a grant from Pool A of the Capability and Innovation Fund that forms part of the £775 million RBS Alternative Remedies Package, a government-backed competition. The bid also blends ClearBank’s world-class payments infrastructure and Tide’s digital banking platform with the aim of offering a genuine alternative to larger banks. If the bid is successful, the funds will be used to tackle barriers to change identified by the Competition and Markets Authority (CMA) in a 2016 report, which are the following:
- Real and perceived difficulties for SMEs to open a new business current account (BCA). Opening a BCA is typically a lengthy and cumbersome process, fraught with the danger of things going wrong and payments being missed. Only 4 percent of SMEs switched their business current accounts in the last year, and only 0.4% used the little-known Current Account Switching Service to do so.
- A lack of compelling attractors to incentivize small businesses to switch. Traditional price and branch-led approaches to competition have to date proved ineffective. The CMA found that “more of the same” business current account offers will not deliver the necessary shifts in market share, and that genuine innovation and value-add services are required to encourage switching. These should assist with solving real-world business problems like access to credit and time spent on administrative tasks, freeing entrepreneurs and firms to focus on growing their business and leisure activities.
- Low awareness of alternative offerings to the high street banks. Large marketing budgets and branch networks have helped incumbent banks to maintain their dominance despite SMEs being increasingly digital and open to digital alternatives. However, Tide has proven that a powerful offering can attract SMEs; in less than two years, Tide has gone from zero customers to one percent market share of the UK’s 5.6 million UK SME , with a new business signing up every eight minutes.
While sharing more details about the partnership, Oliver Prill, CEO of Tide, said:
“We are delighted to have formed this partnership with ClearBank, who share Tide’s values and ambition to save small businesses time by providing cheaper, more personalized services. Our customers want to focus on growing their own business rather than admin, and that is what Tide is 100 percent focused on helping them do.”
Charles McManus, Group CEO of ClearBank, added:
“We are delighted to launch this strategic partnership with Tide, a company that shares our ambition to revolutionize banking services provided to the SME market. ClearBank® is committed to improving SME outcomes in the UK by leveraging innovative partnerships with leading technology and financial services providers in accordance with our white label banking model. The agreement with Tide combines two world-class payment platforms, providing an innovative and compelling client proposition, is further evidence of ClearBank® delivering on this ambition and is an example of how we can use our highly agile technology to build strategic business partnerships.”