£775m RBS bank fund: What do UK SMEs need to know?
Niels Turfboer, managing director of Spotcap UK, discusses the RBS Alternative Remedies Package a key initiative aimed at providing more choice and better financial services to UK SMEs.
it’s a great time to be a UK SME. There is a huge amount of investment being pumped in to various industries to increase choice, improve service and start to address unmet needs.
Further reading:?Are you entitled to RBS compensation? Here’s how to get your money back
Why was the RBS Alternative Remedies Package established?
The RBS Alternative Remedies Package is a pool of 775 million put in place to promote competition and improve customer outcomes in the UK SME banking market. The funds come from Royal Bank of Scotland as part of conditions attached to its 45 billion government bailout during the financial crisis.
There are two core components to the package. Firstly 350 million of the package will go into an Incentivised Switching Scheme, to encourage RBS SME customers to switch to alternative banks or lenders. Secondly, 425 million will form a Capabilities and Innovation Fund, offering 15 grants to banks, SME lenders, payment specialists and fintechs to help them develop capability to enhance their offering for SMEs.
What are the biggest challenges in ensuring that the package will have an impact?
To ensure the package has an impact, it is important that the funds are used to create more choice in the market that address barriers to competition, SME pain-points and unmet needs.
Let me bring this to life with an example. There’s a widespread perception among SMEs that, fundamentally, all business current accounts are more or less the same, and they don’t see enough potential upside to make a switch worth their while. In fact, only 4% of businesses switch business current account providers each year.
A major challenge will be raising awareness and challenging perceptions by proving the genuine breadth of products and services available in the market that address businesses? unmet needs or particular pain points.
How will success be measured?
In the short term the success of the package will be measured by the level of competition it engenders in the SME-banking market. Were talking about more providers with enhanced SME-specific offerings. Ultimately, that should lead to better outcomes for SMEs.
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