London-based SME-only digital challenger bank Tide has partnered with the London-based clearing bank ClearBank, and the partnership has been awarded a grant from the UK-government backed RBS Alternative Remedies Package for €69 million.
The grant is one of three from the first batch of the Capability and Innovation Fund, which is backed by the UK Government and overseen by Banking Competition Remedies Ltd.
The Tide-Clearbank partnership will use the award to challenge the oligopoly that dominates the UK business banking market, and Tide will use the grant to accelerate its growth and provide SMEs in the UK.
The combination of ClearBank’s world-class payments infrastructure and Tide’s unrivalled digital banking platform means entrepreneurs and small business owners will have a genuine scale alternative to the poor customer service, high costs and bureaucracy of high street banks.
Tide’s mission is to help SMEs save time and money, offering a business bank account as well as a comprehensive set of highly usable administrative solutions, such as full integration with accounting systems. Since it was founded in 2015 and launched in 2017, Tide has raised investment from major backers including Anthemis, Augmentum, Creandum, Goodwater, LocalGlobe, Passion Capital and SpeedInvest.
ClearBank is the UK’s first new clearing bank in more than 250 years, delivering a new level of open competition and transparency to the UK financial services marketplace. Only the fifth UK clearing bank today, ClearBank is neutral, independent and is not constrained by legacy infrastructure.
Tide has been growing faster than any other business banking player in Europe, establishing itself as a leader in digital challenger banking for SMEs. The challenger bank already has around 65,000 members and a 1.14% share of the market which totals 5.7 million UK SMEs, according to the Department of Business Innovation and Skills. Almost 10,000 members joined in the first eight weeks of 2019.
To further accelerate its growth, Tide plans to raise new investment to match the grant over the next five years through further funding rounds. The funding will be focused on driving awareness of the Tide brand, overcoming switching friction, and creating extremely powerful reasons for customers not to default to the big four oligopoly that has served SMEs so poorly.
“Tide fully supports the Banking Competition Remedies’ objective of changing business banking for the better,” said Oliver Prill, CEO of Tide. “This is why we are so thrilled that ClearBank’s application was successful.
“Tide started operations in January 2017 with the mission to deliver a wholesale rethink of SME banking in the UK. The grant and our investment plans mean we will create a genuine challenger to the oligopoly that has dominated and failed the UK SME market for too long. We want to thank the BCR for the confidence they have shown in Tide and ClearBank which we intend to repay many times over.”
“We are delighted that the BCR has recognised the strength of our partnership with Tide in awarding us this grant,” Charles McManus, Group CEO of ClearBank. “We both have the ambition to revolutionise 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 banking as a service model. Our partnership with Tide will provide the SME banking market with an innovative and compelling customer proposition, using our highly agile technology.”
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