Digital bank challenger granted full UK banking licence

Digital bank challenger Cashplus, which has a Merseyside operation, has been granted a full UK bank licence by the Prudential Regulation Authority with immediate effect.

As a bank, Cashplus can use part of its £500m of customer deposits for lending and aims to provide £1bn of credit to UK small businesses to support the UK’s post-COVID-19 recovery.

The firm is based in London but has operations in Birkenhead and Birmingham.

It was founded in 2005 and has since served more than 1.6m customers with banking and lending services aimed at UK small businesses and consumers who are typically underserved by traditional banks.

The company generated approximately £50m in revenues in 2020 and, in stark contrast with many other bank challengers, has recorded nine consecutive years of operating profit since 2012 while maintaining consistent revenue growth.

Founder and chief executive, Rich Wagner, said: “Cashplus has reached this milestone at the moment when UK small businesses need us most.

“When we started out 15 years ago we got first-hand experience of the pain that small businesses face when dealing with big banks.

“These same small companies will be crucial to the UK’s economic recovery and they will need a bank that takes them seriously, providing what they need to be successful.

“So, while big banks are slamming the door shut, we’ll be welcoming customers, opening up lending and delivering enhanced products to support them through the challenging months ahead.”

The firm also plans to attract existing business customers from competitor banks with innovative small business-focused features, including payment tracking tools, significant savings on essential services such as payment processing – where it already offers savings of up to 50% over high street rivals through its Payment API product – and integration with all major accountancy platforms.

Wagner added: “We are manically focused on what customers really need.

“We don’t go in for gimmicks or flashy functionality for the sake of it. Instead, we look at simple, effective products with honest and transparent pricing.”

Cashplus said it has taken a disciplined approach to growth since launch, with a focus on sustainable product economics that contrasts with the heavy-loss, subscription-free models often associated with neo banks and digital challengers.

The company is also an established lender with total lending of more than £640m and uses advanced data techniques to support its underwriting capabilities.

Rich Wagner said: “Where some firms have burned through piles of cash in the pursuit of growth at all costs, our disciplined approach and positive product economics mean that we can grow with confidence. Now we’re a bank, there is a tremendous amount of potential waiting to be unlocked.”

Cashplus currently serves seven per cent of all new UK businesses and, as company formations hit record monthly highs during the COVID-19 crisis, it expects to grow its share of this market to at least 10% within the next three years.

To achieve this, the company will focus its product and customer service development around the needs of the 600,000 new companies registered in the UK each year and the 5.7m businesses with fewer than 10 employees.