In February a new initiative launched with the aim of driving more choice for business banking customers, although it might sound a little strange.
It involves a bank asking some of its business customers to consider moving to another provider. And it says that customers who switch will enjoy offers that are better than what’s normally available on the market.
If you’re an eligible business customer with Royal Bank of Scotland or NatWest you may have heard about this initiative.
Whether you are interested in banking sector reforms, or eligible to take advantage of the scheme, it’s important to understand why it’s happening, and what makes customers eligible to participate.
It’s part of Business Banking Switch – a scheme designed to give up to 200,000 eligible customers a unique opportunity to choose from a range of exclusive offers to switch their business current account to a selection of participant banks.
Why is it happening?
During the financial crisis RBS received support from the UK Government. As a result, to meet a European Commission (EC) directive on competition, the bank was required to divest several parts of its business.
This included Williams & Glyn – the name given to a portion of its UK Retail and SME banking business. However, following complications setting up Williams & Glyn as a standalone bank, Business Banking Switch was put in place as part of a broader package of measures to ensure the bank meets its obligations to the EC.
This means that RBS is taking the unusual step of providing £350 million to help a number of competitor banks to create bespoke offers that incentivise some of its SME customers to switch their accounts.
To take part in Business Banking Switch you must have a company turnover below £25 million, and be a customer who was due to transfer to Williams & Glyn. Essentially this is Royal Bank of Scotland SME customers based in England & Wales, as well as NatWest SME customers in Scotland and certain small business customers.
All eligible customers have been notified about the scheme.
What banks can customers switch to?
Choosing the right bank is an important decision for any business. As the overall aim of Business Banking Switch is to create more choice in the business banking market, the larger banks who currently dominate the market are not able to take part.
There are currently nine banks who have offers available to customers:
- Arbuthnot Latham & Co., Ltd
- Clydesdale & Yorkshire Bank
- The Co-operative Bank
- Hampden & Co
- Metro Bank
- Santander UK
- Starling Bank
Eligible customers can use dedicated websites to view and compare the offers available to them from each participating bank. They can then decide if they would like to switch their account(s) as part of the scheme and benefit from the exclusive offers that are available.