RBS planning £750m fintech fund to boost banking competition

The UK Government has proposed a new plan that would see RBS fund and deliver a series of initiatives to boost competition in UK’s business banking market.

The proposal was put forward by HM Treasury in agreement with RBS, which is assigned to help small and medium businesses and enterprises benefit from greater choice in the banking systems that are currently available.

According to the UK Government, the proposed package includes:

  • A fund, administered by an independent body, that eligible challenger banks can access to increase their business banking capabilities
  • Funding for eligible challenger banks to help them incentivise SMEs to switch their accounts from RBS paid in the form of “dowries” to challenger banks to use to incentivise switching
  • RBS granting business customers of eligible challenger banks access to its branch network for cash and cheque handling, to support the measures above
  • An independent fund to invest in fintech to support the business banking of the future

The estimated upfront cost is expected to be around £750m, and other large incumbent banks such as HSBC and Barclays are said not to be eligible to benefit from the proposal.

“This new plan provides a clear blueprint to increase competition in the UK’s business banking market, and would help RBS resolve one of its most significant legacy issues which has held back the sale of the taxpayers’ stake.” a HMT spokesperson commented.

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