Salary Finance, which was co-founded by Google’s former UK boss, connects to employers’ payrolls to offer extras such as salary-deducted savings and personal loans, repayments for which are automatically taken out of an employee’s pay packet.
Deducting repayments automatically from salaries makes the loans more secure and attractive to banks, allowing them to extend credit at a cheaper rate than credit cards or payday loans.
Salary Finance will provide all of the services, while CYBG, through its Clydesdale Bank subsidiary, has agreed to underwrite around £400mln of loans. It has already committed £100mln of that to the joint venture.
“We're delighted to be expanding our lending proposition into new areas through this new Joint Venture with Salary Finance,” said CYBG chief executive David Duffy.
“We have been hugely impressed by the Salary Finance team and the clear social purpose underpinning everything they do and we are delighted to be able to support the growth of this innovative platform.
“The Joint Venture adds to CYBG's growing range of partnerships - with over 40% of UK consumers regularly using FinTech services, there is clear value in partnering with innovative new providers like Salary Finance.”
CYBG shares rose 1.7% to 195.7p in early deals on Tuesday.