The RBS Banking Competition Remedies Fund is continuing to do its bit for fintech innovation by awarding £25m in grants to five early-stage suppliers.
The latest awards come from pool D of the Capability and Innovation Fund and are intended to help commercialise fintech products that would appeal to small businesses. The £425m fund is the biggest element of the £775m restitution package set up to encourage competition in small business banking following the financial crisis of 2007-9.
Banking Competition Remedies, which administers the fund, announced on Friday 14 January that five organisations were selected from 60 applications for the £5m grants:
- Codat: The universal API for small business financial data will use the funds in the first instance to add two-way links from five new accounting systems to its Codat Core data exchange platform. Beyond that, it plans to help 12 small business lenders build and test new products on its platform.
- Fluidly: AI powered forecasting engine that automatically constructs cashflow models for small business users and accountants.
- Form3 Joint: Project with Ebury Partners to build an API-based global transaction platform that will let UK SMEs transfer money across international markets in real time at low cost.
- Funding Options: As an online funding platform, Funding Options will use its grant to boost number of alternative lenders it supports from 50 to 100 and roll out new features such as loan pre-approvals and open banking.
- Swoop is building what it calls a virtual CFO platform, essentially a dashboard that will let small businesses get an instant understanding of their financial position and access loans, grants, investment and savings products.
Pool D is all about commercialisation – helping fledgling businesses expand their market footprint and roll experimental products out to a much wider market. Fluidly is the best known name among accountants for its cashflow forecasting tool. The cloud app, which draws on banking and accounts data to build and project cashflow models for business, won last year’s Accounting Excellence Software Award for Innovation of the Year.
Vowing to match the £5m grant award, Fluidly detailed nine separate commitments it would deliver on the back of the innovation grant, including the launch of an AI-driven financial marketplace that will match business finance needs to suitable finance providers.
Some of the money will help Fluidly deliver a new Actions Hub within 12 months of the award. The portal will offer a single view of company finances including benchmarks comparing it to peers and tailored insights to support decision-making.
Taking an agnostic approach, Fluidly plans to drive competition in lending and savings by taking “new financial intelligence capabilities” to 400,000 small businesses by September 2022 through a network of 25 ecosystem partners and other fintechs.
“Accounting tech is receiving an enormous amount of interest as investors, accountants and businesses wake up to the potential of data-driven tools for the entire financial ecosystem,” said Fluidly founder and CEO Caroline Plumb. “This £5m grant from BCR puts Fluidly in an excellent position to scale our impact and support for businesses.”
In accepting the funds, Fluidly committed to working alongside professional bodies to deliver 20,000+ hours of CPD-certified cashflow advisory training by September 2022. The developer also said it wants to work with 10,000 accountancy firms to improve business outcomes and expand competition within the small business ecosystem.
In February, Banking Competition Remedies awarded £120m to Metro Bank, £100m to Starling and a further £60m to a joint bid from small business bank Tide and Clear Bank from its Pool A fund, which is aimed at stimulating more advanced business current accounts and ancillary offerings.
The fintech gravy train hasn’t dried up yet. While Fluidly and its pool D companions put their £5m awards to work, Banking Competition Remedies is seeking applications from developers of small business lending and payments services for four awards of £10m from its pool C fund. the deadline for applications closes on 28 June 2019.
Ollie Maitland, the chief product officer of Capitalise.com, urged accountants to pay attention to what is happening around these grant awards, because they will play a big part in shaping the banking, lending and alternative finance options available to small businesses in the coming years. While it stood back from the pool D competition, Capitalise.com is focused primarily on lending and is preparing its submission for the pool C race.
“Pool D is about strengthening the marketplace, and will be a real boost to competition,” said Maitland. However, he did not see the pool D winners as threats to his business. “Only Funding Options has lending experience. The others are looking to enter the market and in their commitments some of them are quoting eye-popping numbers.”
According to Maitland, the RBS grants and the matching funds that go will them will help the winners establish themselves. But as a tech entrepreneur he warned about the potential downsides of such free money: “Additonal funds don’t change the fundamentals of building a business. You still make the same mistakes – the money just allows you to make bigger mistakes.”
About John Stokdyk
AccountingWEB’s Head of Insight has been with the site since 1999 and likes to spend his time studying accountants’ technology habits. When not nerding out, you can find him exploring obscure indie music and searching for the perfect organic sourdough loaf from his base in Brighton, UK.