BCR publishes updates on SME lending progress

Several banks have given updates on their progress towards commitments made in order to get funding from the board of Banking Competition Remedies (BCR).

The second update - following the first in August - from Pool A recipients and first update from Pool B and D recipients, indicate that mobilisation of the awardees is now moving into the delivery phase.

Within Pool A, Starling Bank stated that it is currently in the early stages of developing and launching lending products, with lending facilities of £782,000 made available as part of this test environment to date.

“Despite their huge potential for growth, with the promise of new jobs and new revenue streams, startups, by their nature, often have a limited capacity to service and provide security for debt and, to date, this has curbed Starling’s ability to lend,” noted the challenger bank in its update. “To address this, Starling is looking to directly partner with leading SME lenders and finance providers to make more lending facilities available, as it develops its product base.”

Starling said it is in “advanced negotiations with a preferred partner with a view to launching a further lending programme from December 2019”, which will enable it to meet its targets for the first two years and make significant headway towards its overall £913 million lending target.

Starling committed to building a full suite of 52 digital banking products over four years to meet the needs of its small and medium-sized enterprise (SME) customers – with 11 of the 13 products scheduled for 2019 “well underway”, including its SME Web Portal and Direct Debit Origination.

Meanwhile, Metro Bank reported that its first two stores in the North - in Manchester and Liverpool - are on track to open this month, with construction underway in Sheffield and a new site in Bradford.

“Our artificial intelligence led Business Insights capability was launched in September and our mobile cash pick up and drop off service MCash has completed a proof of concept and will launch to SME customers by the end of this year,” read the updated. “Work continues on our straight-through business current account online application and this will be available to customers in 2020.”

Metro Bank noted that there have been changes to the order in which some planned initiatives will land, to allow for the development of the required credit decisioning engine and to enable full integration with its online banking platform.

ClearBank stated it was “fully on track to achieve the next percentage market penetration” to two per cent early in the fourth quarter of 2019. “At this stage we continue to project to exceed the public commitment target of eight per cent by two per cent to a total of 10 per cent by the end of 2023.”

However, no implementation is planned for the credit proposition in this year, but ClearBank added that “a significant number of discussions with lending partners are ongoing”.

As for Pool B, Nationwide Building Society said its immediate focus was on developing a business current account.

“We will launch a highly convenient, integrated business savings product by June 2020,” it stated. “After that, we plan to offer flexible borrowing via our unsecured business loans by the end of 2020.”

This will be followed by the launch of a business credit card with a full suite of controls that can be independently set for multiple users by June 2021.

“We’re in the process of planning how best to introduce our proposition to the branch network,” Nationwide noted. “Initially, this will include a phased rollout across a few branches before a wider rollout to our national network of circa 650 branches.”

Investec Bank explained that it has a recruitment drive underway, with a new head of current account and programme director already brought in.

“We are aiming to have an initial team of circa 30 multi-disciplinary roles in place by early next year,” read a statement. “We are further developing our online deposits and FX execution capabilities and intend to launch these capabilities in 2020, which will give our customers a new digital proposition and enhanced experience.”

The Co-operative Bank claimed to be in “advanced discussions” with a Manchester-based FinTech to provide accounting software and smart invoicing to our customers “and we are also identifying partners who will offer our SME customers other tools and services which will remove overheads and effort”.

Commenting on the latest updated, BRC chairman Godfrey Cromwell commented: “BCR is reassured by the transparent approach of the awardees, not only around the successes they have had to date in creating competition in the SME marketplace, but also around any challenges that they have faced.”

The Capability and Innovation Fund is designed to promote capabilities and competition in the market for banking services to SMEs in the UK.

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