Old guard and challenger banks sit at UK’s switching scheme table
Santander, TSB and Nationwide are 11 of the names that have made it to the UK’s Incentivised Switching Scheme (ISS) for extra cash and Royal Bank of Scotland’s (RBS) customers.
To put ISS into context, Banking Competition Remedies (BCR) is the independent body established to implement the £775 million RBS State Aid Alternative Remedies Package. The bank had to fund this due to the government bailout ten years ago.
ISS will bring some competition and provide funding of £275 million to SME customers from RBS’s scrapped Williams & Glyn (W&G) banking platform, to switch their business current accounts and loans to challenger banks. A further £75 million has been set aside within RBS to cover certain customers’ switching costs.
In the latest ISS development, BCR says 11 organisations have met the eligibility criteria. Along with the three above, they are Arbuthnot Latham, Clydesdale, Co-operative Bank, Hampden & Co, Metro Bank, Monzo, Starling and Svenska Handelsbanken.
BCR will now work with the 11 banks and push on with contracting and verification of operational readiness.
On completing these processes, a dedicated website will place their offers in front of former Williams and Glyn’s SME customers at the end of February 2019.
BCR says it is considering a second application window in late Spring 2019. More information on this will be issued next year.
As reported in 2016, RBS discarded its plans to carve out the W&G subsidiary.
W&G had a network of 300 branches, 1.4 million retail and 200,000 SME clients – effectively the country’s seventh largest bank. It had been dormant for a few decades (RBS absorbed it in the mid-1980s). It was originally set to be revived and re-launched in 2015 by RBS.
In 2016, RBS said it was likely to miss the set deadline and the budget for the spin-off yet again, and blamed the technology issues.
IBM and the BPO arm of Infosys were awarded a €300 million contract with RBS to adapt and run the IT platform for W&G in 2013.
Eventually, it all stopped. RBS wrote off £345 million in separation costs in its half-year results presentation, admitting it had been defeated by the IT challenges of the W&G carve-out.