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.
“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.”