IDE, the finance app for business, is poised to attempt a major shake-up of the market by opening its services to non-account holders.
The fintech firm, founded in 2015, is ready to let all small and medium sized firms connect their existing bank accounts to its platform. That means Barclays or Natwest customers, for instance, can try the Tide offer without switching banks.
Some analysts say this could be a game-changer for open banking. Rivals note that Tide does not have its own banking licence, relying on partner Clearbank for that.
Governments and regulators have been trying to increase competition in the business banking market for years, with limited success.
They think that new players without legacy IT issues might be the way forward.
Kevin Hollinrake MP, Co-Chair, All Party Parliamentary Group on Fair Business Banking, said: “Giving businesses access to a wider range of time-saving, productivity-enhancing services without the hassle of changing banks is very big news and a ground-breaking innovation for business banking.”
Tide serves 375,000 SMEs, about 7% of the market. But the reluctance of customers to switch bank accounts – some stats say people are more likely to get divorced than change banks – has been a hindrance to growth.
Oliver Prill, Tide CEO said: “With established businesses generally not switching banking providers or having multiple banking providers, we reached the conclusion that the only material way competition can be introduced for the established businesses is to allow them to virtually switch to use the Tide platform without actually switching bank accounts.”
From today, business owners the opportunity to connect their third-party business bank account to Tide to access Tide Cashflow Insights.
There remains considerable scepticism among bank analysts that “challenger” banks will ever truly break the stranglehold of the big players – Barclays, Lloyds, Natwest, HSBC and Santander.
Tide itself has not always found favour with watchdogs.
It has been criticised by the British Business Bank for failing to offer certain government repayment options on Covid loans.