Many business owners are still in the dark about the Business Banking Switch Scheme, so let us explain what the new incentive means for SMEs.
The Business Banking Switch Scheme was set up by the government following the financial crisis, as part of the bailout of The Royal Bank of Scotland (RBS).
As a result, RBS agreed to reduce its market share in the UK business banking sector, in order to increase competition.
Following the failure of the Santander and Williams and Glyn projects, the Business Banking Switch Scheme was approved in September 2017. This offers rewards for RBS customers if they switch to another bank for their business current account and loan requirements, with incentives surpassing those which are usually available.
In order to facilitate the switches, RBS has established two funds. The first is a £350m pot which Challenger banks can bid for and will be used at the discretion of each participating bank to incentivise customers to join them. This could be a dowry payment, or assistance with legal fees incurred for switching, such as valuations.
The second fund is known as the Capability and Innovation Fund. This £425m fund will give competitors to the big four banks the opportunity to improve the services on offer to SME customers, so they can invest in infrastructure and staffing to support their new customers.
The scheme is open to SME banking customers with RBS who were due to be transferred to Williams & Glyn, a division of RBS. To participate, your turnover must be £25m or less, and you may not be allowed to apply if your business is in financial difficulty.
When is it happening?
Eligible customers can register now via RBS and NatWest. Registrations will stay open for those thinking about switching until 25 February 2019.
On 25th February 2019 the various rewards and offers will then be launched and customers will be able to see what’s available before deciding whether to switch banks.
Should I switch?
As with any big business decision, it’s always better to seek professional advice. Although some of the offers may seem too good to miss, it’s important to consider what your bank can offer you in the long-term.