The UK’s banking landscape is set for further disruption with the arrival of new challengers determined to grab a share of the small business sector.
IbanFirst & BasS
French startup IbanFirst is launching its fully fledged banking services for companies. Previously know as FX4BIZ, the company has just raised $11 million (€10million) from Xavier Niel and other contributors. Ibanfirst has much greater ambitions than being just a foreign exchange service.
The concept behind the pan-European payments company is simple. ‘Banking as a service’ (BaaS) is essentially a pay as you go banking service which allows users to access whatever elements of the service they need, when they need it.
For companies working with clients and suppliers in multiple currencies, using corporate banks to convert and transfer money to a foreign bank account can be expensive. IbanFirst beats exchange rates, providing smaller fees and has so far managed over €1 billion in transactions across 100,000 transfers for 1,000 clients.
However, this is only the first step and now companies can ditch their corporate bank account altogether. It only takes a few minutes to create a bank account on IbanFirst’s website and receive an IBAN. The startup has a banking licence in Belgium and can operate in the European Union. This makes it easier to accept payments in foreign currencies by sharing your IBAN with your clients and suppliers.
IbanFirst plans to add additional services on top of basic banking features and plans to partner with other fintech companies. It has already signed “partnerships” with Paris-based Younited Credit.
There is the potential for integration with payment processors, factoring services, debit cards and more. IbanFirst already has an API enabling you to integrate other services. Whilst it’s early days for the fintech platform, it could quickly become the preferred option for companies operating in the EU.
The firm says once users sign up for an account, a “complete set of financial services in BaaS mode” include credit, international payments and investment services. The company also says it will roll out more services such as invoicing and start-up incorporation.
Acorn Financial Partners (AFP) & Redwood Bank
New venture, Acorn Financial Parters Ltd (AFP), founded by Jonathan Rowland has submitted a banking licence application and on authorisation will be called “Redwood Bank,” a new UK SME bank, and it expects to receive its banking licence early in 2017. It will offer SME commercial commercial mortgages and business deposit accounts and initially focus on UK SMEs in Hertfordshire, Bedfordshire and Buckinghamshire. It is anticipated that current and new shareholders will invest £50m in the bank over the next five years.
Jonathan Rowland, who played a prominent role in the restructuring and subsequent recapitalisation of Kaupthing Bank Luxembourg said, Redwood’s entry into the market is being driven by the fact that:
This is an ideal time to apply for a full banking licence; the major banks have not returned to anywhere near their pre-crisis business lending levels and the uncertainty caused by Brexit is likely to worsen the situation. At the same time, SMEs have shown a strong appetite for new market entrants offering competitive rates and superior customer service. Against this backdrop, we have a compelling opportunity to build a secure, robust and profitable bank.
Redwood says it will offer secured SME lending products to owner-occupied businesses, as well as to commercial and residential property investors. It will also provide business deposit accounts.