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This week we had a great show as per usual with some really fun discussions on a lot of key stories in the fintech space. Our CEO David M. Brear and Principal Consultant Ross Gallagher sit down with our guests Eric Fulwiler, Executive Director of VaynerMedia and Teana Baker-Taylor, Chief Marketing Officer of Coinfloor.

For our deeper dive this week I’m taking a closer look at a fintech issue at home that’s been upsetting many in the fintech space for quite some time. Delays to the RBS funding scheme persist, this time due to senior hires.

After receiving a bailout back in 2008, RBS agreed to spin-off 300 branches and rebrand them under Williams & Glyn, which would then become a separate entity on the stock market or be sold off. After that plan changed, to avoid fines from the EU for receiving the £45BN bailout, RBS agreed to create a state aid fund of £775 million. Only £425 million is available to challenger banks as a “Capability and Innovation” fund with the remaining £350 million set aside to encourage small business owners to switch accounts from RBS.

It’s a significant amount of money, and challengers understandably want to get themselves a piece of the pie. However, there have been numerous delays, and an application process that was supposed to be over by the end of H1 2018, with some funds distributed by the end of the year, is now not set to open until November 2018. The funds are now planned to be delivered by February 2019. So, what happened and why is there such a delay?

Who’s to blame?


There’s a lot of implication in the news that RBS is at fault. After all, the messaging is that due to senior hires being delayed the RBS fund isn’t being portioned out. But it’s not quite so simple as that. RBS likely has the money ready to go, but they can’t just choose who to give the money to as easily as that. A commission has to be created for the fund which is wholly independent from RBS. Finding the right people isn’t easy.

It’s not senior hires at RBS. It’s senior hires into the commission to decide who to give the money to – David M. Brear

So, RBS is unfairly receiving criticism for something that is essentially out of its hands. But challenger banks are still understandably angry over the situation. It turns out that some applicants have been investing considerable sums into preparing for their applications despite being left in the dark around the process. Reportedly, Metro Bank has invested £595,000 on its application and CYBG has invested around £35 million in the last 6 months. It’s no small sum of money so what is it actually being spent on?

This money should be additive – Teana Baker-Taylor

There’s no information on what the application is going to be like, so it’d be interesting to know what the money is being spent on. Presumably a value proposition on how the banks would spend any grants received from the fund.

Who’s really losing out?


But should challenger banks be relying on receiving this sort of government-linked money? There are always potential delays on any funding scheme and with the delays created so far presumably challengers are looking to other sources to generate funding anyway.

If you’re banking on funding from the govt…then [delays] are something you want to take into account – Eric Fulwiler

However, this money has been earmarked for a specific goal. As Starling Bank CEO Anne Boden explained, this money is for increasing and delivering better outcomes in the UK for SMEs. Unfortunately, it appears as though SME banking is what’s going to suffer in the interim while challenger banks that are preparing their applications wait for the money. Without this funding arriving soon SME banking has a question mark over its future. £450 million buys a lot of room to create new ideas and new services. Maybe our CEO put it best:

I hope they put this one to bed pretty quickly so we can get on with doing interesting things in the SME space – David M. Brear

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