TSB bank has announced plans to be “as aggressive as possible” in disrupting small business lending and providing entrepreneurs with the finance needed to grow their firm.
Recent figures showing 1,000 new accounts opening daily with customer deposits now surpassing £30bn – had “cemented” the lender’s position as a challenger bank that could meet the needs of small business owners.
TSB CEO Paul Pester said “Breaking the stranglehold of the big five banks remains top of our agenda and we’ll continue to work closely with the government, policymakers and regulators, in an attempt, to bring the full force of competition to bear on the UK banking market – and ultimately make banking better for all UK consumers” TSB’s intention is to “offer something new” to entrepreneurs. He continued ““We see ourselves as a challenger bank with teeth and we will be as aggressive as possible when it comes to small business lending.”
What is a challenger bank?
Trust in the traditional banking model is in decline. Low access to finance is frequently cited as a key growth barrier for small firms, while high street lenders have struggled to reconcile rapid branch closures with online services.
Stepping into the so-called “business banking gap” are a host of challengers, targeting the specific needs of a small business market overlooked by the high street. Beginning with Metro Bank’s arrival in 2010, several others have muscled in to tempt founders with a more bespoke service.
We’ve now seen the government look at challenger banks to drive greater competition in Britain’s business banking marketplace. As part of its state aid settlement, Royal Bank of Scotland’s £835m Incentivised Switching Scheme will see 15 separate grants handed to challenger banks to promote their offering to small business owners.
What’s clear in the uptake of challenger banking so far, small business owners are looking to do things differently – even down to having a named contact they can reach out to.