The race to create a new, 21st Century form of bank continues. In Europe, Holvi (coming out of Finland) was desktop-first and hasn’t come to the UK. It also hasn’t been focussed on being a hub for third party services, so therefore behaving more like a platform. In the US there is Seed.co (a YCombinator startup) but they haven’t launched internationally yet.
So with the race still very much on, a veritable star-system of investors have lined up behind the a entrant into the space, in the shape of Tide. You can apply to take part in Tide’s private alpha until the launch this autumn.
Tide claims to be the ‘world’s first’ mobile-first banking service for small businesses. It’s raised a $2m seed round from Passion Capital (with Passion partner Eileen Burbidge joining as Chairman), LocalGlobe, Zoopla founder Alex Chesterman, William Reeve (co-founder from Lovefilm), Greg Marsh (founder from One Fine Stay), Songkick’s co-founder Ian Hogarth, serial fintech investor Errol Damelin and Albion founder Jason Goodman.
Tide’s mobile app will literally read your ID — such as a passport — and establish your identity. It then lets you set up a business current account in 3 minutes or less. Benefits include no set-up, monthly or annual fees.
Tide founder and CEO George Bevis (pictured) says: “Unlike Mondo (currently) you get a sort code and account number — so it’s a full current account rather than a “wallet” and can do faster payments/direct debits etc.” He previously worked in senior roles at both Barclaycard and Zopa.
The space is ripe for development since Main Street banks just don’t really care enough about small businesses as they are painful to deal with. So tech startups are well placed to enter the arena.
In addition, Tide also has a range of additional valuable features for UK small business owners. These include:
• Free banking forever – no monthly, annual or setup fees, just 20p per bank payment
• Money-saving tools including credit, payments (accept cards and direct debits) and foreign exchange which will be available later in 2016
• Fully extensible APIs to build bespoke apps on top of, or easily integrate with, Tide
• Easier accounting and expenses including auto-categorisation of transactions, native integrations to leading accounting software like Xero and FreeAgent, and the ability to issue and send invoices instantly from the app and attach photos of receipts from recent transactions for expenses
• Banking assistance whenever needed, including instant help available from staff via instant messaging and an online customer community
• Safety and security including bank payments always authorised on a known mobile, photo ID and automated Companies House verification required to set up an account, and spend controls for different team members. All deposits made with Tide are ring-fenced at Barclays under an FCA e-money licence
Burbidge (pictured) said: “Tide is the future of small business banking services by addressing serious pain points for small business owners and entrepreneurs. With Tide, small business owners can get an intuitive mobile-first experience that is almost instant to set up and easily integrates with best in class cloud-based tools and services seamlessly.”
LocalGlobe co-founder and partner, Robin Klein said: “Tide is the first fintech start-up we’ve helped launch since Brexit and one with innovation aimed at helping a vital part of the UK economy – small business owners.”
It must be made clear that Tide is not a bank: member deposits are kept in a ring-fenced account at Barclays under an FCA-regulated e-money license by PrePay Solutions (a large B2B deposit manager co-owned by Edenred – a multi-billion dollar B2B financial services provider – and MasterCard).
Funds are held under an e-money license, not a banking license. The primary difference between an e-money license and a banking license is that banks can take investment risks with the money held in their accounts without any prior knowledge of the business owner, however e-money license-holders can not do this. Tide deposits are held by PPS in a ring-fenced account at Barclays and cannot be invested by PPS.
But to all intents and purposes, a small business would simply use Tide just like it would use a normal business banking account.
The rise of Tide and Mondo show that essentially these are more layers over traditional banking, becoming the ‘interface’ to the bank and therefore being ripe for acquisition by actual banks that can’t innovate this fast.