The European Commission likes playing hard ball. Back in 2009 it decided that a bloated RBS had to sell off its Williams & Glyn unit to meet European Union state aid demands. But after a seven-year hunt for a buyer, RBS abandoned the sale and instead proposed a £775 million fund to help strengthen its competitors. But as it prepares to hand out cash to its rivals next month, RBS is charting a course that could see it sweep the rug from under their feet.
While the likes of Monzo, Starling Bank, Revolut, and German-based N26 are fighting hard for personal current accounts, the race for business banking is only just getting started, with firms like Tide, Coconut, and the soon to be launched Allica all hoping to attract a piece of the pie. Put simply, business banking is the next wave of disruption in finance.
Lining up for RBS’s cash are a number of new kids on the block, including Monzo and Starling Bank. But there are also a number of larger firms the mix, including TSB, The Co-operative Bank and Clydesdale Bank.
And unlike personal banking customers, business banking customers can be really lucrative – after all, they get very little for free. Cash withdrawals and cheque deposits often cost money, and monthly fees are pretty much standard, as is lousy customer service and a wait of weeks or even months to even open an account. Business banking customers have come to not expect much at all.
The new group of business banking entrants promise to get the basics right and offer additional features to support business owners, such as cash flow forecasts, invoice management and spending analytics.
Most of these new accounts will be app-based, after all 2018 became the year banking apps overtook all other channels as the UK’s preferred way to bank.