5.5 million small and medium-sized businesses (SMEs), defined as firms of 0 to 250 employees, operate in the UK. They are vital to the economy, providing three-fifths of employment and around half of turnover in the UK private sector. 

Yet accessing reliable banking services and financing has been a persistent challenge. In particular, UK SMEs face several barriers, including: 

• Lengthy and complex application processes: Opening accounts can be slow and impersonal, with many SMEs reporting frustration at the inability to speak to decision-makers or receive tailored support.
• Generic products and high fees: SMEs often receive generic banking products that do not align with their needs, with high transaction fees and poor interest rates. They also lack integration with accounting, cash forecasting, or invoicing services.
• Stringent lending criteria: Including high credit score requirements, extensive documentation, and demands for substantial collateral that smaller firms can struggle to meet.
• Rising borrowing costs: The cost of credit has increased, with SMEs relying on more expensive short-term options like credit cards and overdrafts for working capital rather than toward investment. 

These issues affect the immediate financial health of SMEs and limit their capacity to contribute to the broader economy. 

Today, the picture is changing. While broader economic challenges persist, affecting cash flow and borrowing costs, SMEs have a wider choice of banking providers, with a new breed of firms stepping in to meet the unique needs and potential of the UK’s SMEs.  

Tide, founded in 2017, was a pioneer focussed solely on serving SMEs with digital-first financial services. It began by offering services via a partnership with an Electronic Money Institution (EMI), providing accounts and payment capabilities, complemented by API-based integrations to related services to help businesses better understand their finances and plan confidently. 

It quickly amassed a community of users who appreciated its customer-centric, digital-first approach. However, Tide recognised that the EMI model had some constraints if it wanted to compete with the incumbent banks. That included product gaps including Financial Services Compensation Scheme (FSCS) eligibility and the inability to offer interest on any funds it held. 

When the RBS Alternative Remedies Package was implemented to promote competition and improve customer outcomes in the UK SME banking market, Tide partnered with ClearBank to bid for grants from Pool A and Pool E. In April 2019 and September 2020, ClearBank and Tide received a total of £85m to drive competition and technology innovation in SME banking. 

With those funds, ClearBank Tide Business Banking (CTBB) was developed. 

“We were founded with a clear mission – to deliver a wholesale rethink of SME banking in the UK and be a challenger to incumbents that have failed to provide the services small businesses need to thrive,” explains Dr Oliver Prill, CEO of Tide. “Partnering with ClearBank was an easy decision as it shared our values and ambition to save small businesses time by providing cheaper, more personalised services. The RBS Alternative Remedies Package then provided the ideal catalyst for us to collaborate and inject much-needed competition and innovation into the business banking market.”  

CTBB combines Tide’s digital-first services powered by ClearBank’s banking licence. Unlike other firms, ClearBank offers its embedded banking proposition, where partners leverage the bank’s licence to deliver accounts with FSCS eligibility and API-based access to UK payment schemes on an independent, neutral, non-competing and transparent basis. 

SMEs represent a broad range of sectors and sizes, from sole traders to more sophisticated organisations, and that requires a different approach to serving the market. CTBB has met that by building a flexible and comprehensive service, initially based around a current account and subsequently extended to include a savings account.  

Some of the benefits CTBB is delivering include:  

• Account opening and company formation: the first service to offer this combination in the UK, accelerating the registration of a company and getting it ready for launch quicker. 
• Smoother account opening: Opening a business current account is typically lengthy and cumbersome, ranging from one to four weeks. With a streamlined onboarding capability, working with industry-leading ID&V solutions to deliver greater automation, the average time to open a CTBB account is just two minutes.
• Simplified, real-time payments: ClearBank delivers connectivity to the Faster Payment System (FPS) and Bacs, supporting SMEs of all sizes with the payment types they need.
• Confirmation of Payee (CoP): Introduced Confirmation of Payee, the name-checking service for UK-based payments. The service aims to give peace of mind when transferring funds, while helping to reduce types of fraud and misdirected payments.
• Competitive interest-bearing accounts: CTBB was guided by ClearBank’s philosophy of passing a large portion of the interest earned to support SMEs to do more with their money.
• 48-day reduction in administration: CTBB integrates administration tools and enables SMEs to instantly connect via an API to various services, including accounting, payroll, invoicing, expense management, VAT management and other filings. This is particularly helpful for smaller businesses, which typically operate without a standalone Finance or HR function. 
• Faster, easier switching: CTBB is integrated into the Current Account Switching Service (CASS) infrastructure, allowing SMEs to switch their current accounts easily delivering faster onboarding, trial switching, and closed account histories to be maintained. 

Tide’s partnership with ClearBank has accelerated its strategy to capture a significant market share. It currently services around 600,000 SMEs, representing over 10% of the market. 

“ClearBank and Tide have led the way in encouraging business banking growth in the UK, with more than 600,000 members now benefitting from our platform,” comments Prill. “The partnership between ClearBank and Tide is providing the SME banking market with an innovative and compelling customer proposition that has continued to evolve through a range of products and services.” 

To secure the BCR funding, ClearBank and Tide agreed to a series of commitments related to Pool A and Pool E. By January 2025, CTBB has delivered on all those commitments, a full list of which can be found here alongside the results achieved.  

Some highlights include: 

Pool A 

Commitment to own funds contribution: CTBB is committed to supplementing the BCR award using our own funds to a value of at least 100% of the BCR grant

• Completed with a total of c£70m Own Funds spent alongside the £60m Grant.

Commitment to the transformation initiative: 

(a) Remove friction - Switching proposition: making business current account (BCA) switching simple via open banking and CASS 

• Completed. CTBB has succeeded in making BCA switching simple, exceeding the Switchers target of 170,000 in Q2 2023, completing CASS delivery in Q4 2023 and delivering increases in the trial switching proposition in 2024. 

(c) Administration proposition: Saving you time by seamlessly integrating tools with your BCA 

• Completed. CTBB launched an in-app and web-based invoice scanner, with automatic text processing plus launching “Tide Accounting” which focuses on Self Employed businesses including a profit & loss report availability to all non-VAT registered Sole Traders. 

(d) Credit proposition: Optimising your cashflow using BCA data 

• Completed. CTBB has launched a Credit Insurance product with our partner Hokodo; a Direct Debit product with our partner GoCardless; a Merchant Cash Advance service available to B2C members partnering with Liberis; a Selective Invoice Finance to our members partnering with MarketFinance; Recovery Loan Scheme term loans through Funding Circle and YouLend; an Invoice Finance product for our B2B members allowing different segments within Tide to find the right product for them partnering with Bibby Financial Services and a Cashflow Optimisation Engine (named Cashflow Insights) available on mobile to provide multiple insights tools allowing our members to optimise their cashflow and find the right credit solution. 

Pool E 

Commitment to BCA Market Share: CTBB will increase market penetration by an additional 1% (9% total) and target at least 25% switchers by end 2022.

• Completed both with Tide’s Market Share standing at over 10% penetration.
   

Commitment to support digital payments and business development: CTBB will upgrade our payment functionality to incorporate a) request to pay, b) confirmation of payee and c) digital cheques. For B2B members, CTBB will create and curate a digital member directory.

• Completed with roll-out of Confirmation of Payee (CoP) inbound and outbound, Request to Pay and Digital Cheques and The Digital Member Directory has been launched, which will allow members (optionally) to create online public profiles and get introductions to other Tide businesses. 
   

Commitment to opportunities for partners: CTBB commits to integrate at least 25 SME solution partners by 2022.

• Completed with 25 solution partners successfully integrated. 
   

Commitment to diversity and inclusion: CTBB commits to target at least 35% of women in senior leadership roles by end 2022 and onboard at least 50,000 female and 20,000 BAME entrepreneurs by the end of 2022.

• Completed with ClearBank having over 35% of its senior leadership roles filled by females by the end of the Grant period and CTBB successfully onboarding over 50,000 female and 20,000 BAME entrepreneurs by the end of 2022 
   

Commitment to own funds contribution: CTBB is committed to supplementing the BCR award using our own funds to a value of at least 100% of the BCR grant.

• Completed with a total of c£26m Own Funds spent alongside the £25m Grant. 

“The partnership has consistently met the targets set out to The Banking Competition Remedies’ Capability and Innovation Fund, and we remain fully committed to changing business banking for the better,” concludes Prill. “The combination of ClearBank embedded banking and Tide’s business banking platform continues to remove friction and reduce administration for SMEs by delivering banking services that support them from company foundation onwards.”