Digital challenger bank Cashplus has announced plans to raise capital investment of at least £50m in 2021 to support further growth across all segments and unlock a higher proportion of deposit funding for SME lending following bank authorisation.
The firm was granted a full UK bank licence earlier this month and now holds c.£500m of customer deposits, a portion of which are immediately available to deploy for lending through the company’s established digital banking and lending platform. Since launch in 2005, Cashplus has opened a total of more than 1.6m accounts, including 150k SME accounts, across its digital banking and credit products and lent more than £640m, using proprietary AI technology to drive consistent credit performance even through the Covid-19 pandemic.
As a bank, the company now has access to low-cost deposits and is seeking capital investment to unlock a higher proportion of lending and to further develop its suite of flexible, SME-focused digital banking products which include features such as automated integration to accountancy platforms and Google Maps-powered payment tracking which helps small business owners automatically assign expenses to different projects, jobs or categories.
Cashplus operates a model based on sustainable product economics, contrasting with the heavy-loss, subscription-free models often associated with neo banks. The company has delivered consistent, high growth for over a decade and recorded nine consecutive years of operating profit.
Rich Wagner said: “Where some firms have burned through piles of cash in the pursuit of customer growth at all costs, our cash generative model means that we can grow with confidence and deliver outstanding returns. Now we’re a bank, there is a tremendous amount of potential waiting to be unlocked by an outside investor looking to back a tried-and-true business with an established position in the SME fintech space.”
Cashplus currently serves 7% of all new UK businesses and, as company formations hit record monthly highs during the Covid-19 crisis, Cashplus 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 600k new companies registered in the UK each year and the 5.7m businesses with fewer than 10 employees.
The company also plans to attract existing business customers from competitor banks with innovative small business-focused features and 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.