28 March 2018
- Most trusted brand in financial services to bid for RBS fund to launch a business banking service
- If successful, Nationwide to transform competition where the big five banks dominate 85 per cent of business accounts
- A straightforward current account that prioritises the needs of the UK’s smaller firms who employ one in three people in the UK
“There is a growing crisis of confidence between our businesses and our banks… I welcome the news that Nationwide will bid for funding to allow it to offer an alternative in business banking”
Kevin Hollinrake MP, Vice-Chair All-Party Parliamentary Group on Fair Business Banking
Nationwide, the world’s biggest building society, is to bid for the RBS fund designed to inject choice into the UK business current account market. If successful, Nationwide would transform competition in a market dominated by the big banks, where five providers hold 85%1 of business accounts.
Approximately half of SMEs don’t rate the service they receive as ‘very good or excellent’2, but the lack of real alternatives means just 4% a year switch3. Meanwhile, despite not actually offering a business current account, Nationwide has the top rating for customer satisfaction amongst SMEs4.
As a mutual, driven by member needs and not profits, Nationwide will bid for a share of the fund to serve the UK’s 5.7 million smaller and micro businesses – such as tradespeople, sole traders and owner managed businesses – rather than targeting the big corporates and start-ups. If successful, the Society’s business current account will be designed to meet the straightforward needs of these businesses – a fair value account, which we expect to be free for most, market-leading service and a nearby branch. The product will be refined in the coming months as the Society engages with its members, one million of whom own their own small businesses.
Kevin Hollinrake MP, Vice-Chair of the All-Party Parliamentary Group on Fair Business Banking, said: “High-profile business banking scandals have featured heavily in the press in recent years. It is worrying that there is now a growing crisis of confidence between our businesses and our banks.
“I therefore welcome the news that Nationwide will bid for funding to allow it to offer an alternative in business banking. The market needs to be competitive in order to deliver the right solutions for small businesses, who are the backbone of our economy.”
Joe Garner, Chief Executive of Nationwide, said: “We know there is demand for a Nationwide business current account, because at least 50,000 members ask us each year if we can help. This funding gives us a way to enter the market, serve society and meet our member needs several years before we would otherwise have re-considered it. We are already transforming the market in personal current accounts, winning more switchers than the big banks combined. Nationwide is the only market challenger with the scale, trust and track record to offer a compelling national alternative to the status quo that has reigned in business banking for over 20 years.”
Gareth Thomas MP, Chair of the Mutuals All Party Group, said: “As a leading mutual, Nationwide’s intention to bid for the RBS funding to enter the small business banking market is welcome. Mutuals operate on a different basis to plcs, putting the needs of their members first. Nationwide’s entry into the market could provide Britain’s business owners with some much-needed competition and choice.”
Ben Baruch, Head of SME Policy at the Association of Chartered Certified Accountants (ACCA), said: “For too long business banking has suffered from a lack of competition. As a consequence, too many small and micro businesses have been overlooked or poorly served by the market. It is therefore encouraging to see Nationwide Building Society’s intention to bid for funding to deliver a banking service designed for smaller and micro businesses. ACCA and its members want to see a healthy, diverse and competitive business banking market. Nationwide and other challengers entering this market could help achieve this.”
Notes to Editor:
1 Source: Mintel
2 Source: CMA Report 2016 (p243)
3 Source: CMA Report 2016 (p29)
4 Source: YouGov SME Banking Report 2016.