It may well be possible to set up a company in minutes, but to create a Bank is altogether a different story. What was the background to Recognise Bank?
Our journey started in 2017 when myself and co-founders, Jason Oakley and Adrian Golumbina, decided that SMEs had drawn the short straw in banking for too long. I've been in corporate business banking for my entire career, so I know the sector really well. But I am also an entrepreneur, so I understand the struggles companies face when they look for funding to grow their businesses.
The financial crisis of 2007/2008 made things worse for smaller and growing businesses, especially those based outside of London and the South East. The bigger banks started to cut back on their relationship managers, so firms found it harder to have a face-to-face conversation with an expert about their business needs. Instead, they're now told to complete online forms and deal with call centres - it's a really poor customer experience.
Our vision was to bring back relationship banking with experienced managers that understand small businesses. We combined that with the best tech, a cutting-edge cloud-based banking platform and client management technology, to speed up the lending process and enhance the customer experience.
But unlike a lot of our competitors, with Recognise Bank SME owners still talk to a real person, and our technology ensures they get a quicker decision and faster access to their funds.
The technology also meant we were able to build the Bank's infrastructure rapidly and we can respond to the needs of customers quickly, in contrast to the big banks hampered by legacy systems. For example, we launched our personal savings products within two days of getting our full banking licence authorisation, and also rapidly developed our Professional Buy-to-Let loan because we could see that was where the demand was going.
Banks need funding themselves and somewhat more than a typical start up. Was Recognise Bank an easy pitch to potential investors at planning stage?
Investors are business people, so they've experienced the same challenges we are trying to fix and they understood our vision completely. Unlike a lot of new lenders, Recognise Bank is an FCA and PRA regulated bank, so to be able to achieve a banking licence demonstrated to our investors our experience and commitment, as well as the strength of our business strategy.
We have a number of keystone investors who have been with us from pretty much the start and continue to be supportive of Recognise Bank as we grow. They are engaged, encouraging and contribute to building an exciting strategy for Recognise Bank.
Did the pandemic delay your opening?
As the pandemic hit we carried on with our strategy, achieving Approval with Restrictions (AwR) as planned in November 2020. What we found was, not only was there still the need for a new SME bank, there was also a lot of pent-up demand from SMEs who were emerging from the pandemic, looking to grow or follow new opportunities they had discovered as they pivoted their businesses during lockdown.
A lot of the big banks, and even some of the new lenders, were focussing on providing government backed Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loan Scheme (BBLS), so other SMEs were still crying out for support.
It was a good time to launch Recognise Bank, and with established players looking inwards, we were able to attract experienced and proven new customers.
No doubt achieving a banking licence signals the end of the beginning, so what's next?
We were fully authorised in September 2021 when our deposit restrictions were lifted, which was a major milestone for us. We launched our first personal savings range days later, which has so far attracted nearly £100 million in savings deposits from savers looking for a better interest rate.
We recently launched a range Business Savings Accounts, with our Easy Access Account paying 0.90% AER. When you consider that some of the big banks pay as little as 0.01% AER on their business savings accounts, you can see that SMEs are being treated poorly.
Our focus for the future is to accelerate the development of our tech capability to be best in class and to continue to support the UK's growing small businesses with excellent service and great products. We will innovate to stay ahead of the game.
Is the plan to operate mainly online or will Recognise Bank have a presence in major UK financial centres?
We are a digital bank and we embrace the best in fintech available, as well as our own expertise and proprietary technology. That makes us efficient and innovative. But the technology supports our people, not replaces them.
The regional hub network we already have means we can support business in areas like the Midlands and the North. In the months and years to come we will look at increasing that footprint to reach as many SMEs as possible. We will maintain a balance of physical representation and online digital channels, building the customer relationships which are vital to our future success.
As a challenger bank what will separate Recognise Bank from traditional banks, and indeed other challenger banks, looking to reduce the UK's dependence on the big four high street banks?
Ultimately SMEs will vote with their feet when they're fed up with their current bank and want better service and to be able to talk to an expert about the lending their business needs. This is true of both the big banks and some of the smaller tech-based lenders coming through that struggle to provide a meaningful one-to-one service or achieve speed of decision and execution.
Our aim is to raise our profile, build enduring relationships and leverage technology to support, not replace, the human interface. We do that by continuing to support growing businesses. Their word of mouth is invaluable and we are already seeing repeat business, which is great news for our future plans.
A brief time trading, but a near five-year journey to get to where Recognise Bank is today, how proud are the founders of what has been achieved so far?
At the end of March 2022 we had delivered £100 million in lending to SMEs, just over six months since we had achieved our fully authorised status, which means Recognise Bank is one of the fastest growing new banks in the UK. We have launched personal and business savings, built an incredible team of colleagues and have great plans in place for the future.
That makes me very proud of our achievements and the team that delivered them, but more importantly, I'm proud that we have played a part in supporting the UK economy through a difficult period. There is a lot to look forward to.
For further information visit Recognise Bank
