Cashplus, one of the UK's oldest FinTechs after being founded in 2005, has finally become a fully-fledged bank after gaining a banking licence.

Without a banking licence before, Cashplus had to rely on expensive funding from other financial institutions to be able to lend.

The change means Cashplus can now also lend against a large chunk of its customers' deposits, and become a nimbler competitor against some of its challenger banking rivals, including Starling, Monzo and Tide.

It confirmed: “Before becoming a bank we had e-money and consumer credit licences from the Financial Conduct Authority (FCA) to provide banking services like current accounts, currency cards, payment services, credit cards and other types of credit.

“This meant we offered financial services a bit like a bank but without actually being one.”

It added: “As a bank we’re now able to improve our existing services and lending products and, importantly, offer useful new ones.”

Rich Wagner, chief executive of Cashplus, told the Financial Times: “We had some very unattractive lending terms from traditional High Street banks - the new licence will take our cost of funds from nearly 10 per cent down to zero, and allow us to provide more widespread lending solutions for SMEs in a period where they need it the most.”

Cashplus, which specialises in lending to SMEs, has posted an operating profit for nine consecutive years.

Cashplus has around £500 million in deposits from about 1.6 million customers.

Earlier this year, Cashplus moved to acquire the current account portfolio of icount for an undisclosed sum.

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