Santander is teaming up with Funding Circle - becoming the first high street bank to refer customers to a peer-to-peer lending platform.
With all the buzz about the government enforced mandatory referral scheme for banks, nobody expected such a relationship to emerge organically. But Funding Circle – the world’s leading peer-to-business platform with a strong presence in both the UK and US – has reportedly been in negotiations with Santander for months. In exchange for the bank’s endorsement, Funding Circle will in turn signpost its customers to Santander’s day-to-day relationship banking support, cash management, growth support services, and so on.
Ana Botin, CEO of Santander UK, commented:
“SMEs need access to multiple sources of finance, and Santander's partnership with Funding Circle is a good example of how traditional and alternative finance can work together to help the nation’s SMEs prosper. Peer-to-peer financing is also a useful way to introduce people to the concept of investing in entrepreneurs; an important element in a healthy enterprise economy.”
Recent research from the Alternative Business Funding collaboration suggests that 250,000 businesses a year could benefit from referrals to alternative finance providers.
Samir Desai, CEO and Co-Founder of Funding Circle, also weighed in:
“This partnership recognises our role as the only marketplace that caters for, and is dedicated to, small businesses. In Santander we have found a fellow challenger brand that shares our commitment to putting small business customers’ needs first. They have created a blueprint for other banks to follow.”
Santander is clearly aligning itself as a champion for small businesses. The bank’s lending to SMEs over the past 4 years has been growing by an average of 20% per annum. It extended £4.1 billion of new facilities to small businesses throughout 2013. This pioneering partnership will bolster the bank’s SME services even further – and will give Santander a clear one-up over its competitors. The question now is – will those fellow banks follow the example of Santander? Count Vince Cable, the Business Secretary, amongst those who’d like to think so:
“I want to see others follow suit and make this standard practice for all large banks.”