Funding Options and others share £25m from RBS competition fund

Funding Options and five other fintechs have been granted a total of £25m from a fund set-up to boost the quality of the financial services available to small businesses in Britain.

The Board of Banking Competition Remedies (BCR) has awarded £5m to each of the firms: Funding Options,Codat,Fluidly,Form3 together with Ebury Partners and Swoop Finance.

The BCR has £775m in total to hand out to UK lenders to improve competition among the country’s banks and financial services firms.

The fund was set up with cash from the Royal Bank of Scotland (RBS), and is part of European Union conditions attached to the £45bn government bailout of the high street bank at the height of the financial crisis a decade ago.

Account reviews

This is the third round of cash handed out by BCR, following awards earlier this year. These three lenders fought off competition from 55 other firms to claim these grants.

Small business finance broker Funding Options has made a number of commitments to the BCR, including funding an additional 10,000 small firms with around £500m in alternative lending by the end of 2022.

The London-based broker, led by founder and chief executive Conrad Ford (pictured), added it will get 30,000 small firms to review their current business accounts through a new online comparison tool it will develop. It has also pledged to raise an additional £5m from investors to fund its plans.     

Business software developer Codat said that “a minimum of 100,000 UK small firms will benefit from new integrated products and services developed on the Codat platform” among its commitments to the BCR.

Alex Cardona, co-founder and chief operating officer of London-based Codat, said: “We’re too far into the 21st century for small businesses to be wasting their time manually keying in data in and scanning PDFs every time they need a loan. They want financial services to work seamlessly with the digital accounting systems they already use, such as Xero or Quickbooks.”

London-based artificial intelligence (AI) firm Fluidly said it will use the funding to speed up the development of its cashflow management software and give small businesses better access to the emerging technology.

‘Pressing challenge’

It plans to connect 400,000 small firms to its technology by 2022, and will match the BCR £5m award to boost product development.

Fluidly founder and chief executive Caroline Plumb said her firm provides “control, certainty and confidence around cashflow”.

She added: “We’re intent on building a product that helps businesses with their most pressing challenge and allow them to benefit from the transformational potential of AI.”

Payments platform Form3 and finance lender Ebury, both London-based, said their real-time services will be rolled out to “at least” 690,000 small firms by the end of 2023. They have also pledged to add £6.6m of their own cash on top of BCR’s funding.

Small business broker Swoop Finance said it will help 162,000 firms to open additional accounts to perform faster payments or deposits, generating £243m in savings. The Milton Keynes-registered firm added it would help 216,000 firms switch their utility provider, generating £222m in savings. It also pledged to spend £3.3m of its own cash on top of the BCR award to achieve its aims.

‘Commercialisation of fintech’

BCR chairman Godfrey Cromwell said this round of awards are aimed at “the commercialisation of fintech”.

He added: “There is a vibrant and varied fintech community across the UK and Europe and BCR received a diverse range of strong, ambitious and innovative applications. It was very difficult to get down to just 5 awardees – we could easily have awarded to many more.  Those selected provide services ranging from lending to international payments, from cashflow management to technology infrastructure, and are an exciting addition to the portfolio of capability and innovation grants to date.”

In May, Nationwide Building Society, Investec Bank and The Co-operative Bank have been granted a total of £80m from the fund in a bid to boost small business lending in Britain.

In February, new lenders Metro Bank,Starling Bank and ClearBank were granted £280m in the first round of awards from the fund to boost their challenge to incumbent high street banks.