Business bank accounts – how does the market look?

Business bank accounts – how does the market look?

All businesses need banking facilities of some sort or another and with the entry of a new wave of banks into the marketplace and a series of apps and online facilities you can be forgiven for thinking that it’s a bit of a minefield.

What kind of banking facilities are available and how do you decide what you want?

The large high street banks are probably the first place that people will look when they are thinking about business banking services. HSBC, Lloyds, Nat West and Barclays have been a mainstay of British banking for many years.

To be honest this is probably the best place to look for the widest range of services under one roof with the big names accounting for the majority of business bank accounts and services that go from a simple current account to complex loan and investment products.

With service like that and wide coverage then why wouldn’t a business choose to bank with one of the high street names?

Well the first thing to say is that they often aren’t ‘high street’ nowadays.

In fact your business banking is much more likely to be done online or by calling a central call centre that could be anywhere in the world. This lack of a personal touch is one of the main complaints that people make about large banks and if you are looking for more of a partnership approach then maybe the bigger banks aren’t for you.

Whilst having your banking with a large group often gives the business owner a sense of security it is sometimes the case that when things go wrong it is difficult to get the monolithic organisations to respond.

Larger banks also tend to charge larger fees for transactions or charge for things that others offer as standard and if you have poor credit or work in an area deemed not acceptable such as money services then you’ll probably struggle to get an account.

The second tier of banks may not be as well-known but in many cases will offer the same range of services.

Banks such as Santander, Royal Bank of Scotland and Clydesdale will either be able to offer the same range of services or will be a subsidiary of a larger bank that they can pass you on to. Often the charging structure will be a little more reasonable but they won’t have the branch structure of the major players which will be a problem if you need to use branch services regularly.

Alongside the more traditional services there are a number of so called ‘challenger banks’ that aim to provide a disruptive influence to the banking sector.

Possibly the best known of these, Metro Bank has been making great strides in the banking world and has received glowing reviews for its customer centric approach and great service levels.

Most of the newly set up banks will have superb online offerings (whereas the more established banks sometimes see this as an add on) and in fact some only offer an online presence.

Indeed, some of the banking services have grown from online companies such as Paypal and Western Union where a payment service has grown into a method of taking and making payments that businesses can use effectively.

The downside to this is that there can often be no branches at all and the range of service may be limited. Some challenger banks don’t offer business accounts at all.

It is true to say that there is a huge range of banks available to business customers so how do you choose the best one for you?

The best place to start is with a ‘wish list’ of features that you want to see from a bank.

Is branch access needed? Do you want a top line online system? Do you need your bank to automatically download transactions into your accounting software?

Once you have a list then rank them both in order of desirability and also as ‘must haves’ and ‘nice to haves’.

When you have your ordered list you’ll then need to do a bit of work researching the marketplace and understanding exactly what each bank has to offer the business customer.

Initially it’s best to do desk research as you can knock out a lot of the field where they simply don’t offer your full range of ‘must haves’.

It is possibly a good idea to choose a half dozen or so of the most likely contenders and then go a little deeper looking at their reviews and ratings and also asking around your contacts to see what experience people have had with your candidates.

A word to the wise here, most people will have a bad story to tell about any bank so try and dig down and find out what the specific issues were and see if they would affect you.

Once you have done your desk research then you’ll need to choose two or three for a shortlist and then arrange a meeting with someone from the bank. Most have business banking specialists who will be more attuned to the needs of a company and they will often be working in sectors or size of company so that their experience is relevant to you and your business.

Sadly, some banks will see the initial meeting as simply a sales opportunity to sell insurance, pensions or savings products. Frankly if they do that then it’s probably best to pass. Some banks are very much easier to contact. Try them out at Digital Answers

Finally you’ll need to make your choice.

Although many banks will offer special deals like free gifts and free banking periods you’d be wise to check out the small print on any offers and then work out what your banking will cost after the free period is up. Sometimes the free banking period at the start is swallowed up by higher charges after a number of months.

Once you have all of your data then you’ll need to rank your shortlist. You need to try and take an impassionate view of the offers from the banks but also it’s important to include your gut feeling following your meeting.

Did the business manager seem to be telling the whole story? Did they understand your business and have any good suggestions? Do you think you could form a good working relationship with them?

The good news is that if you make the wrong decision then it’s easier than ever to change banks but making the right decision on day one is by far the better option!

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