Monzo and Starling among the banks in the running for £275m RBS fund
Four challenger banks, including Monzo and Starling, have qualified for an RBS switching fund.
Eleven organisations are in the running to get a share of a £275 million funding scheme to encourage small and medium-sized businesses (SMEs) to switch their business account or loan away from RBS.
The scheme is part of a larger set of funds planned in an agreement between RBS, the government and the European Union after the bank’s £45 billion bailout following the financial crisis.
The total £775 million fund is aimed at boosting competition in banking, with the ultimate goal of offering customers better deals.
Together with Monzo and Starling Bank, challengers Metro Bank and Hampden & Co also qualified for the scheme.
The application process was also opened to mainstream banks, and other institutions that were deemed eligible are Arbuthnot Latham, Clydesdale Bank, Co-operative Bank, Nationwide, Santander, Svenska Handelsbanken and TBS.
The 11 institutions that qualified were announced by the Banking Competition Remedies (BCR) body, which was set up to distribute the £775 million pot.
Challengers are just setting foot in the business banking market – Monzo, for example, doesn’t offer a business account yet, but says it’s planning to launch one with the help of RBS funds.
BCR’s chairman Godfrey Cromwell said: “It’s very good news that a broad selection of organisations have stepped forward and made a diversity of offers right across the SME client-base. Today’s announcement marks an important milestone for Incentivised Switching.
“Customers will be the real decision-makers here. We look forward to getting through the contracting stage and seeing these offers made public so that customers can react. We anticipate that a further application round in Q2 2019 will widen the range of offers still further”.
This comes the day after the Competition and Markets Authority (CMA) announced a package of reforms against loyalty penalty, with firms in five markets (including saving accounts) accused of overcharging loyal customers.