Funds donated by The Banking Competition Remedies Board to inject competition into the UK's business banking market have led to a 13% shift away from large incumbent banks to smaller rivals, with Starling and Clearbank the chief beneficiaries.
The BCR was charged with distributing £775 million in cash to promote competition in the SME banking mkarket under a scheme agreed with the EU following the Royal Bank of Scotland bail out at the height of the 2008 financial crisis.
The Board claims the cash handouts have helped change the landscape of financial services for SMEs in the UK, with up to 25% of small businesses on track to switch their banking supplier by 2025.
Starling Bank, which picked up £100 million in grants, and Clearbank, the recipient of an £85 prize pot, have been singled out for exceeding the goals set, with each achieving close to a seven percent market share.
As an added bonus, the programme has created over 1,173 jobs, a number which is expected to grow to at least 1,757 by 2025.
Recipients of funds have also gone on to raise significant amounts of private capital, with £1.9 billion sourced following pool funding.
Alexandra Frean, cheif corporate officer of Starling says the awards have been transformational for the business, which is set to move into profitiability on the back of its growth in business banking. "We’ve already for somewhere around 6% of the UK SME market," she says. "To achieve that kind of market share after such a short time - I can’t think of another example where that has happened.
"The whole point of this exercise was to bring about change in the small business banking market and I really think it has succeeded certainly in Starling’s case."