Tide, an SME challenger bank, is teaming up with ClearBank, the UK's first new clearing bank in more than 250 years, to compete for a portion of the Royal Bank of Scotland's £775 million (US$997 million) "Alternative Remedies" package.
ClearBank has applied for a grant from Pool A of the Capability and Innovation Fund, which forms part of the Alternative Remedies package that was created in the wake of RBS's government bailout in 2008. Tide will build the customer-facing part of the project, the company announced in a blog post.
If successful, the partnership would attempt to "challenge the oligopoly that dominates the UK business banking market," according to Tide. Specifically, the two would work on problems identified in business banking by the Competition and Markets Authority in 2016, such as the lengthy, complex process that goes into creating a business bank account, a lack of incentives to allow companies to switch who they bank with easily and simply, and the general lack of awareness for business banking on the high street.
Tide and ClearBank are not the first digital banks to apply for funding from the Alternative Remedies package.
Digital bank leader Monzo applied last year and announced that its application was successful and that it plans to release its initial business banking product in 2019. This will give Tide, a rapidly emerging leader in the fintech UK sub-sector, a competitor that has racked up more than 1 million UK customers for its personal current account. (See Monzo Plans to Shake Up SME Banking With Business Current Account.)
London-based Tide was founded in 2015 by George Bevis, and has currently raised just over £20 million ($25.7 million) in three rounds. It is currently headed up by Oliver Prill, a 20-year veteran of the financial services industry, who became CEO in August 2018. ClearBank, also London-based, was also founded in 2015, by Executive Chairman Nick Odgen, but has not disclosed its funding.
Tide CEO Oliver Prill announced the partnership on Sky News. (Image: Tide)
Tide CEO Prill 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% focused on helping them do.
"The RBS Alternative Remedies Package is a golden opportunity to inject competition and innovation into the business banking market. Banks have traditionally viewed serving SMEs as a marginal and low-revenue activity, which is why they have terrible customer satisfaction ratings. Our customers love Tide because we are doing things differently, and a grant from Pool A will allow us to go even further, faster, for UK SMEs."
Meanwhile, ClearBank Group CEO Charles McManus commented: "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."
Phil Oakley, Site Editor, TechX365