The funding will be used to provide financial support and products to help SMEs address the challenges they will face in the post-coronavirus and post-Brexit economic environment and to seize on the opportunities that arise. The bid blends ClearBank’s payments infrastructure and Tide’s digital banking platform with the aim of offering a genuine alternative to the high street banks.

The application to the Banking Competition Remedies will provide help to SMEs in the current challenging environment and help them to capitalise on the Government’s ‘levelling up’ agenda. The application will support SMEs in meeting the accelerated demand for digital services and enable them to become more environmentally sustainable.

The application is also intended to address issues in the Open Banking agenda and  to help it work as intended. ClearBank and Tide recognise that the available funding can make a real impact in helping SMEs emerge stronger from the crisis.

In the current environment, the bid for Pool E of the Capabilities and Innovation Fund will build upon the market share gains ClearBank and Tide have delivered over the last 18 months.

The bid will increase efforts to tackle barriers to competition in business banking and give SMEs the tools to turn crisis into opportunity. These include:

• Leveraging Open Banking to remove friction: Open Banking will be used as it was intended, allowing businesses to use an existing third-party business current account on the Tide platform; both to make payments but also to use the rich set of tools available (e.g. invoicing, expense management). There will be no need for the existing current account to be moved to Tide, removing friction and leveraging Open Banking. SMEs will be able to move their business to the platform without moving their business current accounts.
• Improving funding opportunities with unparalleled access to debt and equity: The proposal acknowledges the fact that funding for SMEs needs to be addressed by matching their diverse needs with a broad range of options rather than more of the same balance sheet lending. Building on Pool A deliverables, ClearBank and Tide will partner with additional third-party lenders, make ‘beyond Open Banking’ data available through a Tide Lending API and build out proprietary lending with an overdraft product. For more complex lending, ClearBank and Tide will launch managed networks, for equity solutions and access to Angel and VC investors.
• Help SMEs become more digital, supporting digital payments and business development: ClearBank and Tide will introduce request to pay (e.g. via embedded invoices), confirmation of payee and digital cheques. For B2B members Tide will help them grow their business by creating and curating a digital member directory with public profiles to advertise services and by building a managed services network for accountants and payroll providers.

The following would be delivered in addition, with the £35m grant:

• Post-Brexit assistance by providing payment functionality to support SME imports and exports: ClearBank and Tide will upgrade business current accounts with SWIFT IBANs for international payments and members will be able to open international currency accounts in 19 currencies. Deeply integrated into the Tide platform, businesses will save time and money, allowing many more SMEs to engage in international trade.
• Preparing for a more sustainable future: As contributors to the All Party Parliamentary Group on Fair Business Banking’s Bankers For NetZero initiative ClearBank and Tide will introduce functionality that will allow business owners to understand their carbon footprint, help them to reduce it, and allow them to purchase carbon credits as offsets.

Charles McManus, Group CEO of ClearBank, said: “Driving competition in business banking is now more important than ever, helping businesses survive this period of uncertainty and thrive in the long term. By securing additional funding from Pool E, we’ll be able to harness the agility and efficiency we have shown so far in our on-target Pool A delivery and have even more of an impact, accelerating the provision of services to SME businesses.

“Unlike traditional banks, our platform-based approach provides not only choice for SMEs but also rich opportunities for product partners. We have the capability to deliver deep integrations with third parties quickly and at scale and by committing to integrate with at least 25 SME partners, there will be significant opportunities for innovative SMEs to provide curated, value-add solutions.

“We believe these partnerships, combined with a number of powerful new tools, will further enable us to offer a truly compelling alternative to the high street banks.”

Oliver Prill, CEO of Tide, said: “Competition and choice in the business banking space is more important than ever and needs to be addressed urgently. Switching accounts has been made unnecessarily sticky, with old barriers remaining and the Government’s response to the coronavirus crisis reinforcing them. For example, repayments under the critical Bounce Back Loan Scheme will link millions of SMEs to the big five for many years. ClearBank’s world-class payments infrastructure combined with Tide’s unrivalled business banking platform mean that we can develop innovative ways to get around this, particularly by using Open Banking in the way it was intended.

“As well as removing friction, we need to continue to provide powerful attractors as an incentive for SMEs to switch to Tide. Crisis recovery can turn threats into opportunities. We have identified the key areas in which SMEs are threatened and have world-class solutions that will allow them to get back on their feet and come out stronger.

“We are delighted to be continuing to work with ClearBank, who share Tide’s values and ambition to support small businesses at this very difficult time. ClearBank and Tide are fully on track to deliver on our Pool A commitments and see Pool E as a crucial opportunity to push those commitments even further to have an even greater impact on the market.

“We are ready to get started immediately, have a laser focus on the small business market, state of the art technology and a strong base position with almost 4% market share.”