Digital Banks Among Winners for Places in RBS Switching Program
December 19 2018 - 9:43AM
Dow Jones News
By Adam Clark
Two digital-only banks are set to participate in a 350 million
pound ($442.5 million) program to incentivize small-business
customers to switch away from Royal Bank of Scotland Group PLC
(RBS.LN).
Online banks Monzo and Starling were among the 11 organizations
announced Wednesday as eligible for the switching program. The
funds are being provided by RBS to comply with European state-aid
rules, as the U.K. looks to boost competition for small-business
banking.
Spanish lending giant Banco Santander SA (SAN.MC) was the
largest bank to be included. Other successful applicants included
CYBG PLC (CYBG.LN), Metro Bank PLC (MTRO.LN), TSB Bank, the
Co-operative Bank and the Nationwide Building Society.
"It's very good news that a broad selection of organizations
have stepped forward and made a diversity of offers right across
the SME client-base," said Godfrey Cromwell, chairman of Banking
Competition Remedies, the body overseeing the funding awards.
Whether business customers are willing to switch to digital and
smaller lenders will be eagerly watched as a sign of the future for
the U.K. banking sector. A wave of technology-focused startups such
as Monzo, Starling and Revolut have attracted millions of British
customers by offering streamlined accounts and services such as
currency exchange, but face scepticism over whether they can
convince customers to entirely abandon traditional lenders.
The switching program is the first part of the competition plan,
which will also see RBS provide GBP425 million in grants to help
bidders develop their services. The first recipients of those
awards are due to be announced in February.
Write to Adam Clark at adam.clark@dowjones.com
(END) Dow Jones Newswires
December 19, 2018 10:28 ET (15:28 GMT)
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