Wylie & Bisset welcomes rise of challenger banks


Wylie & Bisset, the leading Glasgow-based chartered accountants with a national reach, has welcomed the rise of the challenger banks offering SMEs and start-ups a variety of fresh, faster and easier funding options.

The boom in the number of challenger banks over recent years has been in part a consequence of the restrictions on finance providers entering the UK market being relaxed. Such banks typically distinguish themselves from their traditional counterparts by the deployment of modern financial technology practices, such as online-only operations, that avoid the costs and complexities of traditional banking.

Megan Hughes, corporate finance manager at Wylie & Bisset, says that the phenomenon spells good news for start-ups and SMEs, and welcomes the news that Glasgow-based challenger bank AlbaCo aims to provide lending and savings facilities to SMEs by early next year.

“SMEs are demanding more flexibility with regard to the banking services and funding they can source, and challenger banks are sometimes better placed than their traditional counterparts to offer that flexibility,” she said.

“Some challengers are seeking to offer advice outwith funding provision or banking services, such as providing a broader range of support and business advisory advice, from which start-ups in particular could benefit.

“Many of them are making an effort to offer low transaction costs, making banking less expensive for start-ups, which is to be welcomed as companies at formation stage need to minimise their costs.”

Hughes suggests that another advantage of challenger banks is that many of them operate solely over the phone or online, removing the need for business owners to take time out of their business to visit a branch to take care of their banking needs.

“Challenger banks seem more prone to make decisions quicker than their traditional counterparts. Start-up entrepreneurs seeking funding will want to secure that funding as quickly as practicably possible, and whereas most High Street banks would typically take longer to make a lending decision, some new challenger banks can make that decision within 48 hours.”

Hughes notes that some challenger banks offer bank accounts that integrate with cloud accounting software, which will be particularly appealing to business owners, allowing them to keep their finances on track and minimise processing time.

“The good news is that there’s now lots of choice available in the banking marketplace for start-ups,” she said.

“They are no longer restricted to high street banks as there is now a variety of challenger banks with a range of fresh, faster and easier funding options for them to explore.”