Tide to become first major SME banking player to open platform to non-account holders
Tide, the UK’s leading business financial platform already serving over 375,000 SMEs – almost 7% of the market – has today announced that it will allow SMEs to connect their existing business accounts, held at other institutions, to its platform using open banking.
In the first such move by a major SME banking player, this will allow small businesses to save time and money on their financial admin, by using the full range of finance and admin products available on the Tide platform, without opening a Tide business account. The Tide platform will be gradually opened up to offer access to more and more products over time.
Oliver Prill, Tide CEO said: “Tide has been enormously successful in attracting new businesses, by helping them start out – helping business owners to register their businesses and open a current account quickly and easily. We will continue to serve new businesses, with the Tide current account and an ever expanding set of starting out services.”
“However, with established businesses generally not switching banking providers or having multiple banking providers, we reached the conclusion that the only material way competition can be introduced for the established businesses is to allow them to virtually switch to use the Tide platform without actually switching bank accounts,” Prill explained. “This involves linking their existing bank account into the Tide platform via open banking to access our full range of finance & admin services.
“Businesses will not only be able to use services such as invoicing, but, in time, open banking will also allow them to view and make payments on their existing bank account via the Tide platform. As such, this will not only introduce much needed competition into the established SME segment, but will also provide the most powerful boost to open banking for SMEs to date.”
“Giving businesses access to a wider range of time-saving, productivity-enhancing services without the hassle of changing banks is very big news and a ground-breaking innovation for business banking,” Kevin Hollinrake MP, Co-Chair, All Party Parliamentary Group on Fair Business Banking, added. “More competition means more choice, better service and lower fees for businesses and we very much welcome this revolutionary approach.”
Increasing competition in the business banking market has been a priority for government and regulators for a number of years. While with the help of the RBS Alternative Remedies Fund good progress has been made in introducing competition in the new business segment, doing the same for established businesses has been more challenging. Surveys regularly report that around 13% of businesses look to switch banks within 12 months, yet in practice only an estimated 4% actually switch per annum. Only 4% are estimated to have accounts at different providers.
This gap between intention and action is explained by the high demand business owners have on their time and the complexity of informing business partners of new bank details.
Tide’s Open Access move is sponsored by the RBS Alternative Remedies Fund Pool E. Tide targets serving 100,000 businesses with third party bank accounts by end 2022.
Starting today, Tide will give business owners the opportunity to connect their third party business bank account to Tide to access Tide Cashflow Insights, a product that predicts a business’s future cash flow, using data from their business bank account.
Tide will quickly scale its Open Access offering, giving businesses with third party bank accounts the ability to connect to Tide and use products ranging from invoicing, to expense management, payroll and credit services.
Open Access will further set Tide apart from traditional and neobanks, that make holding a bank account with them a requirement. “Tide is a business financial platform. On the platform, businesses have a choice between using Tide or partner label products. Now we are extending this concept to current accounts. We are all about serving small businesses optimally making sure that all products work seamlessly together, not about forcing SMEs into a Tide label product,” Prill said.