Rod Ashley

The early-stage investment will facilitate aspiring challenger Bank Alba’ transition to second-stage operational status under a restricted license.

The funding round has been announced in partnership with Seismic Venture Partners and will enable new investors to collectively own nearly half of the business. This is a fraction of the valuation of other challenger banks at the same stage of their evolution.

Through its high-touch, high-tech offering, Alba is looking to revolutionise banking for SMEs in the same way that Monzo and Revolut are for consumers.

The new digital-first bank for SMEs aims to differentiate itself with its ambition to bring back relationship banking. The bank will launch with 35 staff, including a dedicated team of bankers providing a personal service to SME customers visiting their premises and really getting to understand their businesses.

This fills a much-needed gap between the major banks who have been reducing customer-facing personnel; and the wave of challenger banks who rely on automation and algorithms, often leaving customers unable to speak in person or build personal relationships.

Rod Ashley, chief executive and the former head of Airdrie Savings Bank, said: “These bank managers will be authorised and empowered to make lending, overdraft and other financing decisions, much like the bank managers we used to have.”

Mr Ashley believes this will be particularly important as the economy attempts to emerge from the recession created by the coronavirus pandemic.

SMEs form the largest part of the UK economy. More than 99% of the 5.9m private businesses in the UK are SMEs and account for approximately 60% of total employment in the private sector. The industrialisation, centralisation and dehumanisation of high street banks are restricting access to credit.

Launching now, this Series A round is being offered directly to smaller investors with a minimum investment size of £1,000.

Mr Ashley added: “We are really excited by the opportunity to broaden our investor base to local people in the local areas we are looking to develop and grow into. Our existing investors have been fantastic in their support to date and it is an important part of our journey to open up this investment to a broader range of investors using our planned pod network in cities across the UK including Aberdeen, Belfast, Bristol, Glasgow, Leeds, Liverpool and Middlesbrough.”