Alba was designed with the business customer in mind. When we launch, Alba will be a new Scottish based business bank on a mission to help fuel economic growth through direct lending to SMEs in Scotland and the wider UK regions.
Alba is led by an experienced team who share a passion to transform SME customer banking; Alba will offer an intimate knowledge of the banking sector with an extensive relationship network and strong personal reputations. Our initial investors are successful business people who recognised the need for a new bank to help business owners in the UK.
Alba’s specialised, relationship-centric service proposition has been designed to address specific segments in the UK banking sector. Its core focus is the SMEs market, where traditional banks have ‘industrialised’ their operating model through a reduction in customer-facing personnel. As a result, relationship banking has been devalued and banking ‘automated’.
The evolution of Alba started in January 2017, when Alba CEO, Rod Ashley, was working as CEO of Airdrie Savings Bank, then the only remaining trustee savings bank in the UK, and a fine example of local, community banking.
Airdrie was instituted under the Savings Bank (Scotland) Act 1819, and this act was a throw back to Victorian savings philanthropy rather than a robust modern framework for what was required for banking in the 21st Century. This presented a number of challenges to Rod and his team. It precluded the raising and investment of additional capital, and the further regulatory requirements of modern banking provided a heavy additional cost burden.
The team grew the lending book considerably over a short period of time and demonstrated the basis of a new banking model. However, the fact that the Savings Bank (Scotland) Act 1819 did not allow the raising of additional investment capital meant that the Trustees and management team reluctantly had to conduct an orderly wind down of the bank, bringing to an end of over 180 years of community saving and lending in the area.
Jim McColl, Chairman and CEO Clyde Blowers Capital, heard news of the wind down and contacted Rod to explore the possibility of retaining their banking licence and changing the strategy to focus on the UK SME banking market.
Together they approached the Bank of England, and whilst the retention of the original banking authorisation was not possible, the Bank of England was encouraging of a new business proposal and bank application, to create a purpose-built SME-focused bank, to be headquartered in Scotland and serving the UK regions.
Emboldened by the feedback from the Bank of England, seed funding was acquired to establish Alba in April 2018.
The DNA of Alba features strongly from Airdrie Savings Bank and the long history of the Scottish Savings Bank. Rod asked several key team members to join Alba, including Wendy Morrison, the Chief Financial Officer. Other former colleagues have also joined the Alba team.
Airdrie Savings Bank and the savings bank movement embodied the maxim that banking is about people and, as a direct descendant, Alba will strive to channel that community spirit and relationship-driven banking model with which they became synonymous.
Alba will be a new bank with a clear vision and purpose – to support small and medium-sized businesses as they develop their aspirations, grow and realise their potential.
We know that SMEs are not given the right level of time and attention by the banking industry, yet SMEs are the backbone of the British economy, driving growth and creating employment.
Alba will help SMEs grow by applying specialist expertise and insight while forming strong and lasting relationships with our future customers.
Since the financial crisis of 2008/09, we have experienced a tremendous shift in attitudes towards business lending from the major UK banks.
Challenger banks, predominantly in the south of England, have emerged to address this opportunity. The recent increase in small Challenger banks across the UK is due in part to the funding gap at the SMEs end of the lending market. Market consolidation and lending behaviour of the high street banks have put the onus on smaller lending institutions in the UK to fill a funding gap for SMEs of between £5bn-£12bn.
Centralisation of decision-making and automation of loans below £2m-£4m have made it increasingly difficult for high street banks to satisfy SMEs’ requirements. SMEs report that their bank account providers do not maintain effective working relationships with business owners, while ‘relationship managers’ have little or no understanding of SMEs businesses and their business plans. SMEs also report difficulties in obtaining bank finance and cite slow response times as a factor holding back development and growth plans.
Alba’s ambition is to be a trusted business bank by bringing back the craft of relationship banking. SMEs form the largest part of the UK economy. More than 99% of the 5.9m private businesses in the UK are SMEs, accounting for roughly 60% of total employment in the private sector. The industrialisation, centralisation and dehumanisation of high street banks are restricting SMEs’ access to credit.
Alba’s philosophy will be to understand each SME individually and to build relationships on comprehension and trust. Alba’s experienced relationship and credit bankers, combined with its state-of-the-art technology platforms, will deliver this key point of difference.
We are delighted to announce we have officially submitted our banking licence application, following our invitation from the Regulator in October 2019. As over two-thirds of challenger banks fail before they are even invited to submit their application, this represents a significant achievement and reaffirms our belief of becoming a fully operational SME-focused bank in 2022.
Since submitting our application, we have commenced a series of monthly meetings with the PRA and the FCA as we work together through the application journey.
Our next key milestone is securing authorisation with restrictions. At this stage, we will be able to call ourselves a bank, however, our activity will be restricted and will involve completion and testing of our IT system and implementing our controls and procedures.