In our latest blog we look back at the journey to create Recognise Bank
After three and half years of hard work, Recognise Bank received its full authorisation in September 2021 with the removal of our deposit restrictions by the PRA (Prudential Regulation Authority). It was the culmination of a journey to create a new and different kind of small business bank, but it also marked the start of a new, and possibly even more exciting chapter for us.
The removal of deposit restrictions meant that we were allowed to start offering savings products, and within days that’s exactly what we did, launching two new personal savings accounts, with our 5-Year Fixed Rate account being called a “Best Buy” by the Daily Mail.
Launching savings products was a key part of our strategy and rationale from the very beginning. Being regulated means we can offer people savings accounts that are FSCS protected, giving them confidence in Recognise Bank and security in the knowledge that their money is safe up to the FSCS limit. In turn, we will be able to use that money to further increase our lending to SMEs. So, by saving with Recognise Bank, people are also helping small businesses across the UK to grow.
We call it saving with a purpose, because not only are our customers backing the kind of businesses that are important to their local economy, companies they or their loved ones actually work for, they are also helping the national economy re-build from the devastating impact of the pandemic.
This flurry of activity came hot on the heels of another successful fundraise, attracting a further £14million in investment, bringing the total investment in Recognise up to £54million. Attracting this level of investment and support into a new bank not only shows confidence in Recognise and our management team, but also recognition of the fact that the SME sector is currently poorly served by existing providers and needs an injection of energy and competition.
But you don’t have to take our word for it, because it is also the conclusion reached by an influential group of MPs. The All-Party Parliamentary Group (APPG) on Fair Business Banking published its proposals for reforming the SME finance sector in September 2021, describing the current system as “not fit for purpose” because it is has historically “been dominated by four large shareholder driven banks”. The APPG said that new start-ups in particular found it difficult to secure funding, as did businesses based outside of London and the South East, as well as firms run by Black and Minority Ethnic (BAME) individuals.
In a raft of recommendations the group of cross-party MPs called on the government to “turbocharge the challenger bank and non-bank lending sector” as well as “strengthening and supporting the UK’s thriving FinTech” sector, saying that they provided a “welcome challenge to the Big Four banks since the crisis.”
Hear! Hear! Never has there been a bigger need and a better time for a new small business bank.
Since we started our journey, we have seen a lot of would-be banks and lenders enter the fray, with some stumbling, some falling by the wayside, while others continue to make their way towards becoming fully authorised without restrictions like us. We have also witnessed the growth of app-based business banks that are removing the barriers to opening up and managing a business current account, a development that we welcome.
But we have also seen a further reduction in the provision of commercial lending on the high street and an erosion of services offered to SMEs as the mainstream banks and other lenders pullback. When a growing business needs to talk to an expert about their borrowing needs, unfortunately neither many of the established banks or the new online only entrants will be able to provide the personal support and expert knowledge company owners and entrepreneurs need.
That is where Recognise Bank, and the brokers and intermediaries we work with, can make a real difference.
And because with our savings products we are now appealing directly to savers and not just commercial customers, the blurring of the distinction between “business” and “consumer” will become even greater, especially when we launch business savings accounts in 2022. Recognise Bank is here to support local communities and regional economies and help the UK as a whole to thrive.
This is testament to everyone at Recognise Bank, to our partners and suppliers, friends and family, and everyone that has helped make this dream a reality.
Here’s to an even more exciting and successful future!