Tide, a financial service application focused for small- and medium-sized businesses, announced it is opening its app and allowing customers to connect existing bank accounts to its platform, according to the Evening Standard.
The move is an attempt by the UK-based company to combat account switching fatigue, enabling customer SMBs to use Tide’s business banking tools without the need to use their partner bank, Clearbank.
Analysts say this could be a large step forward for open banking, with government regulations pushing for increased competition in the business banking market for years with limited success, according to Evening Standard.
Tide currently serves about 375,000 SMBs, but says that the reluctance of customers to switch bank accounts has put a damper on its growth. Surveys show that 13% of business look to switch banks within 12 months, but only 4% actually switch every year due to the high demand business owners have on their time, according to Finextra.
The company’s Open Access plan is sponsored by a £25 million award from the Royal Bank of Scotland (RBS) Alternative Remedies Fund Pool E, intended to inject competition into the business banking market. The company also recently raised a $100 million Series C led by Apax Digital in July.
“With established businesses generally not switching banking providers or having multiple banking providers, we reached the conclusion that the only material way competition can be introduced for the established businesses is to allow them to virtually switch to use the Tide platform without actually switching bank accounts,” Tide CEO Oliver Prill said.
While the move is in line with the government’s recent business banking push, Tide has not always been in favor with the UK’s regulators. The company was previously criticized by the British Business Bank for failing to offer certain government repayment options on COVID-19 loans, with managing director of small business lending Richard Bearman saying the company had “not met expectations.”
In other recent fintech news, the ICBA launched its venture fund, aimed at accelerating BankTech adoption among community banks. Payhawk also raked in a $112 million fundraise to accelerate corporate spend management.