The UK’s banking landscape is set for further disruption with the arrival of new challengers determined to grab a share of the small business sector.
The first, and perhaps most interesting is IbanFirst, a pan-European payments company which is launching a ‘banking as a service’ proposition for small business. BaaS is essentially a pay as you go banking service which allows users to access whatever elements of the service they need, when thy need it.
The firm says once users sign up for an account, a “complete set of financial services in BaaS mode” include credit, international payments and investment services. IbanFirst has already signed “partnerships” with Paris-based Younited Credit.
The company also says it will roll out more services such as invoicing and start-up incorporation.
New challenger emerges
Meanwhile, Acorn Financial Partners (AFP) has submitted a banking licence application to the UK’s Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA). The application relates to the development of Redwood Bank which is scheduled to open in 2017.
Redwood’s entry into the market is being driven, its founder Jonathan Rowland said, by the fact that “major banks have not returned to anywhere near their pre-crisis business lending levels and the uncertainty caused by Brexit is likely to worsen the situation”.
According to reports, Redwood will follow a regional model, with particular initial focus on the home counties – specifically Bedfordshire and Hertfordshire. Redwood says it will offer secured SME lending products to owner-occupied businesses, as well as to commercial and residential property investors. It will also provide business deposit accounts.
Meanwhile another challenger, Metro Bank, has offered its response to the FSB’s report: ‘Locked out: The impact of bank branch closures on small businesses’ which was published earlier this week.
“We recognise how important face-to-face relationships are for SMEs and the crucial role stores play, from transactional services that are fundamental to the day-to-day running of trading businesses, to offering support and expert advice,” said Ian Walters, Metro Bank’s managing director of business banking.
“Not only do all Metro Bank stores have local business managers able to make local lending decisions, but they also host hundreds of free networking events throughout the year and act as a real hub for the local community. What’s more, businesses are able to visit their local store at a time convenient to them, with stores open seven days a week, from early in the morning to late at night: opening hours designed to complement SMEs’ busy work schedules.