If you are a Royal Bank of Scotland customer, and your business has an annual turnover of less than £25 million, then you may be eligible for incentives to switch your banking to another provider.
For many years the provision of business current accounts and credit for SMEs has been dominated in the UK by the incumbent ‘big four’ banks (HSBC, Lloyds, Barclays and RBS) who together hold around 85% market share.
As a condition of the government providing financial support to Royal Bank of Scotland (RBS) in 2008, the state-owned bank is now preparing to hand over £6 billion in customer deposits and £4.2 billion in loans to challenger banks, known as the ‘business banking switch scheme’.
The government hopes this will increase competition within the banking sector and provide customers with far greater choice.
However, many business owners are still in the dark about the scheme, here we explain what the new incentive means for SMEs.
What is the business banking switch?
This is an incentivised switching scheme for challenger banks to pick up some of the RBS customer base.
Originally known as the ‘incentivised switching scheme’, it is now better known as at the ‘business banking switch’. Banking Competition Remedies Ltd (BCR) is the organisation tasked with overseeing the implementation of the scheme, independent of RBS and the UK Government.
There is £225 million worth of funding available to challenger banks in the form of dowries to encourage the switch of eligible customers.
The dowries range in size from £750 – £50,000 depending on the customer’s business turnover. Challenger banks will determine how to apply the dowries for the benefit of the eligible RBS customers through preferential offers and incentives.
The scheme is open to eligible RBS SME banking customers. All eligible customers should have already been contacted by RBS. To participate, your turnover must be £25 million or less, and you may not be allowed to apply if your business is in financial difficulty. Those seeking to participate in the scheme will need to be registered on the RBS microsite and will be provided with a unique reference to confirm eligibility.
Who are the challenger banks?
Eleven banks have been approved to join the scheme, including:
- Arbuthnot Latham
- Co-Operative Bank
- Hampden & Co
- Metro Bank
- Nationwide Building Society
- Starling Bank
When is it happening?
BCR has confirmed that the business banking switch will launch via a dedicated switching website on 25 February 2019, but applicants can register their interest now via the RBS microsite.
Should you switch?
As with any big business decision, it’s always better to seek professional advice. Although some of the offers may seem too good to miss, it’s important to consider what your bank can offer you in the long-term.
If you are an eligible RBS customer and would like to talk about the business banking switch, please contact Jim Akrill using the details below.