London headquartered cloud-native clearing bank ClearBank, in partnership with business banking platform Tide, have been awarded £25m by the the RBS Alternative Remedies Package to strengthen the challenge to High Street Banks.
The funding, applied for in August, will be used to provide financial support and products to help SMEs address the challenges of a post-coronavirus and post-Brexit economic environment and to seize on the opportunities that come out of it.
ClearBank and Tide are to capitalise on the Government’s ‘levelling up’ agenda, establishing initiatives aimed at tackling barriers to competition in business banking.
The funding will be used to leverage Open Banking technology, with the hope of allowing businesses to use an existing third party business current account on the Tide platform; both to make payments and use invoicing and expense management tool.
It will also be used to improve funding opportunities. Building on Pool A deliverables, ClearBank and Tide will partner with additional third-party lenders, make ‘beyond Open Banking’ data available through a Tide Lending API and build out proprietary lending with an overdraft product.
For more complex lending, ClearBank and Tide will launch managed networks, for equity solutions and Angel and VC investors.
It is also to be used to help SMEs improve digital infrastructure by introducing request to pay (eg via embedded invoices), confirmation of payee and digital cheques.
For B2B members Tide will create and curate a digital member directory with public profiles to advertise services.
Charles McManus, Co-Founder and CEO of ClearBank, said: “The pandemic has created deep-seated uncertainty, particularly among UK SMEs who are among the hardest hit. This grant will help us ensure SMEs not only survive this period but are able to seize the opportunities available and thrive in the long-term. By securing the additional funding from Pool E, we’ll be able to have even more of an impact, building on the agility and efficiency we have shown so far in our on-target Pool A delivery.
“By committing to integrate with at least 25 SME partners, we’re opening up opportunities for innovative businesses to provide valuable changemaking solutions. We believe these partnerships, combined with a number of powerful new tools, will further enable us to offer a truly compelling alternative to the high street banks.”
Oliver Prill, CEO of Tide, added: “We are thankful that the BCR has granted our partnership with ClearBank the opportunity to create a genuine alternative to the oligopoly that has dominated the UK SME market for too long.
“Competition and choice in the business banking space is more important than ever and this grant will help us to address it urgently. Switching accounts is sticky, with old barriers remaining and the Government’s response to the coronavirus crisis reinforcing them.
“For example, repayments under the critical Bounce Back Loan Scheme will link millions of SMEs to the big five for many years. ClearBank’s world-class payments infrastructure combined with Tide’s unrivalled business banking platform mean that we can develop innovative ways to get around this, particularly by using Open Banking in the way it was intended.
“As well as removing friction, we will provide powerful attractors as an incentive for SMEs to switch to Tide. Crisis recovery can turn threats into opportunities and we have identified the key areas in which SMEs are threatened and have world-class solutions that will allow them to get back on their feet and come out stronger.
One immediate opportunity is for banks small and large, alternative lenders and commercial finance brokers to join the leading funding network we will be building.”