By Aisling Finn on Monday 9 November 2020
ClearBank's Charles McManus and Tide's Oliver Prill discuss their most recent successful joint bid for BCR funding.
Since then, the two fintechs have been on a mission to help SMEs through innovation, technology and, more recently, through the Covid-19 pandemic.
“Firstly, we have an incredibly successful functional partnership. Secondly, we have been consistent in meeting our commitments from our Pool A bid and finally, something that is really important in any partnership, culture.”
Prill and McManus said that with their Pool E bid came a renewed sense of teamwork and a drive to continue down the path they had set themselves on.
“Not only did we win the second time, but we also decided to apply together for the second time,” Prill told AltFi.
“It’s a bit like a 50-year married couple redoing their vows,” Prill laughed, “We could have done it differently, but we very openly decided not to because we think this unique combination is really winning.”
The two CEOs both agree that, above all else, their similar work culture is the most important factor when it comes to a successful partnership.
“As well as our commitment to helping SMEs with debt and equity, we also have a real commitment to diversity and inclusion,” said McManus.
Both companies have renewed their support to bettering diversity in inclusion within fintech, “not just gender diversity but ethnic diversity too,” McManus adds.
According to the ClearBank CEO, 22 per cent of its senior leadership is female, well above the fintech average of just 17 per cent, with a commitment to bring that figure up to 35 per cent by 2022 as part of its BCR funding agreement.
Both CEOs echoed calls to help further diversify fintech, with both saying it’s moving in the right direction but more still needs to be done, especially if we are to fully recover from the current Covid-related recession.
“The people that get us out of the state we are in will not be in government. It has to be the business community that creates jobs and thrives and drives the economy back up," said Prill.
“We are going to really target and support the BAME community because at this stage we need to get maximum leverage across people who will really help with entrepreneurship,” Prill added.
Prill added that he thinks both gender diversity and ethnic diversity within an SME is a winning combination: “there’s a report that shows that female businesses are extremely well run and very good, but, one of the things it found was that female entrepreneurs are a little bit more cautious about starting out.”
There have long been calls by industry leaders to allow for more people from different backgrounds, genders and ethnicities to be given a seat at the table, and both Prill and McManus look set to take another step in the right direction.
Earlier this year, Tide found itself in a spot of bother after the alternative lender failed to deliver on its Bounce Back Loans (BBLS), eventually shuttering its offering in July after its allocated funds ran out.
Unlike other fintechs accredited to the government scheme, like Starling, Tide doesn’t have a banking licence so can’t lend out its customers deposits, rather the cash had to come directly from the fintech’s balance sheet.
Prill told AltFi: “What caused us to pause was that we needed to be able to refinance and to do this we needed some degree of government funding, which could come either directly from the government or the Bank of England.”
“Our promise still stands from July, we will immediately un-pause [our BBLS lending] because we never withdrew from the scheme.”
The BBLS scheme has been, by far, the most popular government-backed lending programme on offer throughout the pandemic, with banks and non-bank lenders having dished out £40.2bn to more than 1.3m SMEs.
“With this new funding we want to give time back to SMEs to invest in their business and make more money and help them invest in their family time,” said McManus, pointing to their latest BCR haul.
“Being totally digital gives us the chance to be totally different and innovative in helping SMEs to make that change and not just survive but thrive too.”
As McManus said: “There’s a really big difference in terms of quality of API. The basic open banking APIs have a really long wat to go.”
“But the proprietary APIs that we are investing in with Tide are really quite special,” he went on.
ClearBank services a number of financial institutions, including fintechs, banks and those with an e-money licence, and so is incredibly keen to see the world of open banking take one more step towards open finance, even if it is still a long way off.
Tide allows for the integration of third-party accounts on its platform as well as offering its own current accounts.
“The way that [open banking] will work is once people see strong use cases around open banking and begin to see the benefit, they will start to use it,” Prill said.
As well as wanting to deliver for their customers, both Tide and Clear bank have to reach certain criteria in order to fulfil their BCR funding commitments.
For instance, Tide has to reach a 5 per cent market share of SME business banking customers within the first few months of 2021, it’s already at around 4.5 per cent, to reach the threshold it set out in its bid.
So, there you have it. Tide and ClearBank’s partnership is a fruitful one but the team is not just focused on helping out their own SME customers but is also keenly focused on bettering the world of fintech in general.
Both fintechs are hoping that the new funding will revitalise their efforts to help SMEs through one of the worst economic downturns we have ever experienced, but it is not without a few hurdles placed in their way too.