Business banking startup Tide is calling on the UK Government to open up access to the RBS bail-out fund to e-money institutions, arguing that the strict eligibility criteria for the £775 million package will serve only to stifle competition in the SME banking sector.
Royal Bank of Scotland was directed by the government and the European Commission to set up two funds worth a combined £775 million following its £45.5 billion bailout during the financial crisis.
While ten percent of the fund is up for grabs to alternative banking startups, Tide points out that the most important parts of the package are open only to those authorised by the Prudential Regulatory Authority (PRA), and includes the likes of Santander and TSB.
This locks out e-money institutions like Tide, which claims that the cash boost will merely reinforce the existing advantages held by banks in serving the SME market.
Oliver Prill, CEO of Tide, says “Expanding the package’s eligibility will make the most of the once in a lifetime opportunity to shake up SME banking by introducing real competition. Opening up to the UK’s growing fintech sector will offer businesses an unparalleled choice to try out innovative alternatives tailored to their needs after years of being underserved by the high street. Without this change, the oligopolistic structures that have served small business so poorly in the past are likely to persist.”