Allica got our banking licence in 2019 and launched to market soon after in March 2020 with property-backed lending to established businesses. We have grown significantly since then. Allica now offers a full suite of banking services to established businesses, including a current account, savings accounts, and multiple lending products, all with the support of a relationship manager.
The growth we’ve experienced has been extraordinary. We’ve already lent over GBP 2 billion to SMEs and have well over GBP 2 billion in deposits from savers. Last year, when we were revealed as the fastest-growing fintech ever in the UK, we also achieved our first full year of profitability.
The key thing to know about Allica is that we’re built especially for what we call ‘established businesses’. That’s those businesses with between 5 and 250 employees who are too complex for most of the other fintech challenger banks to serve, but too small to be given a decent service by the big banks.
They make up a third of UK employment and GDP, yet if you speak to an established business owner, they’ll tell you they feel like they’ve been left behind by the banks. They’re usually getting poor value in terms of low savings rates and often having to pay fees to even have an account. And they’ll often be forced to spend ages on hold to a call centre if they ever want to talk to their bank, too.
At Allica, we’ve leveraged our technology so that we can give every one of our customers access to a dedicated relationship manager. We also offer market-leading savings rates and a current account that not only has no monthly fees, but actually pays cashback.
We compare it to how business banking used to be, just better.
Many SMEs actually have a great experience with their bank. If you’re a micro-SME, for example, there are loads of fantastic app-only options to manage your business banking, like Starling or Tide.
Similarly, if you’re a large business, the incumbent banks will move heaven and earth to keep you happy because you’re worth a lot to them.
It’s these established SMEs caught in the middle that are being let down. The traditional banks’ legacy technology means they struggle to serve them. In most cases they have been stripping away the people on the ground able to provide personal support. You can see how little value many banks put on established businesses when you consider the returns they’re giving on SME savings. Last year Allica produced a report – The Great British Savings Squeeze – which revealed that SMEs were missing out on GBP 7.5 billion of interest thanks to saving with the big banks.
SMEs have been left stranded as a result. And remember, this is not a small group. They’re a third of the UK economy and vital parts of our communities. They’re those manufacturers on the outskirts of town, the local pubs, or even plenty of tech companies! It’s these businesses that Allica is here to support.
Uncertainty has plagued business owners for years now in the UK, which has been a big drag on investment. Brexit, covid, geopolitical instability and the cost-of-living crisis have all given business owners reason to hold off from buying a new premises, expanding their product range or upgrading their machinery, for example.
Thankfully, while many big question marks remain, there is a sense that we’re entering a period of greater stability, which can only be a good thing. We’re already seeing this in the number of enquiries we’re getting from business owners for finance to grow. Long may it continue!
Absolutely – it’s hard to choose just a few! We’ve helped businesses with a whole range of challenges. For example, AgeCare – a care home operator in the UK who had large reserves of cash on their balance sheet. By opening a current account with Allica they’ve been able to get a really strong return on their cash balances, which otherwise were sitting idle. This is money they’ve been able to reinvest back into their business.
Or then there’s Rainbow Productions, a global leader in the manufacture of character costume mascots, such as the ones you see at football matches. They were seeing demand spiral as live events opened up again after covid and so needed more space. By working with their Allica Bank relationship manager, they were able to purchase a premises next-door to their existing one to meet that demand.
These are things both were struggling to do with their existing banks.
What advantages does your company offer over traditional financial institutions in providing finance and banking solutions to SMEs?
Allica Bank is built especially for established SMEs, so that means everything we do is tailored to their needs. We’re built on proprietary technology that is designed specifically to make life easier for business owners, not harder. We also give every current account customer a relationship manager – someone with real banking expertise that can help business owners get the most out of their bank.
We also think banking should be rewarding. So instead of charging fees for our current account, we provide cashback. And we give great rates of return on business savings, too.
It won’t surprise you that I think the biggest disruptor in business banking in the next few years is going to be how established businesses are being served. Having been pretty much forgotten by other banks, the room for making a difference is huge in terms of making banking simpler and quicker, and creating opportunities for SMEs to grow.
Here, there are some exciting innovations that will make a big change. I think experiences are going to become more integrated. Having accounting and payment processing – both accounts payable and receivable – in one place, for example. This should make life a lot easier for business owners.
AI is also going to be transformative for speeding up the application process by automating fraud detection, using predictive analytics to make more accurate and faster decisions, and enhancing customer service with smarter chatbots. I can also see huge potential for AI to optimise how businesses manage their cashflow by automating the accounts payable/accounts receivable process.
With all that said, we have to keep an eye too, on changing regulation. In particular around fraud, which, while absolutely vital, may add in greater friction to payment journeys where there wasn’t before. Whilst the aim is customer protection, it does wholly depend on how best the industry adopts this with minimal friction.
With the accelerated pace of change we’ve seen in the last few years, 10 years feels like a long time to predict forwards. I do expect most of the above to happen sooner rather than later, though.
About Nida Sattar
Nida is Product Director – Transaction Banking at Allica Bank. She is responsible for the development and roll-out of Allica’s current account for SMEs. Prior to this, Nida led the International Payments Product team at ClearBank, where she was accountable for ClearBank’s international expansion plans and product deliveries across payments and FX. She started her career at J.P. Morgan on the graduate scheme and made Vice President, with successes including launching J.P. Morgan’s SEPA Instant offering. Nida is a frequent speaker at various industry forums, including EBADay, Innovate Finance, Women in Payments, Fintech Connect, etc, and was in the Women in Fintech Powerlist 2021 as well as the Money20/20 RiseUp Europe Cohort for 2022. Nida has a Master of Arts in Land Economy from the University of Cambridge.
About Allica Bank
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