Digital Banks Among Winners for Places in RBS Switching Program

By Adam Clark

Two digital-only banks are set to participate in a 350 million pound ($442.5 million) program to incentivize small-business customers to switch away from Royal Bank of Scotland Group PLC (RBS.LN).

Online banks Monzo and Starling were among the 11 organizations announced Wednesday as eligible for the switching program. The funds are being provided by RBS to comply with European state-aid rules, as the U.K. looks to boost competition for small-business banking.

Spanish lending giant Banco Santander SA (SAN.MC) was the largest bank to be included. Other successful applicants included CYBG PLC (CYBG.LN), Metro Bank PLC (MTRO.LN), TSB Bank, the Co-operative Bank and the Nationwide Building Society.

"It's very good news that a broad selection of organizations have stepped forward and made a diversity of offers right across the SME client-base," said Godfrey Cromwell, chairman of Banking Competition Remedies, the body overseeing the funding awards.

Whether business customers are willing to switch to digital and smaller lenders will be eagerly watched as a sign of the future for the U.K. banking sector. A wave of technology-focused startups such as Monzo, Starling and Revolut have attracted millions of British customers by offering streamlined accounts and services such as currency exchange, but face scepticism over whether they can convince customers to entirely abandon traditional lenders.

The switching program is the first part of the competition plan, which will also see RBS provide GBP425 million in grants to help bidders develop their services. The first recipients of those awards are due to be announced in February.

Write to Adam Clark at [e-mail]

(END) Dow Jones Newswires

December 19, 2018 10:28 ET (15:28 GMT)

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