According to reports published in Computer Weekly on 25 July 2019, a growing number of UK small and medium sized businesses (SMEs) are switching banks. The data shows that in Q2 2019 twice as many SMEs used the Current Account Switch Service (CASS) when compared with the same period in 2018.
CASS is operated by Pay UK, and its data shows 17,687 UK small businesses swapped banks in the second quarter of 2019. Just 8,000 UK SMEs swapped banks in Q1 2018, showing a change of attitude for the sector.
Switching banks made easy
The scheme to make bank switching easier for small businesses was launched in 2013 and is one of a number of regulatory changes designed to improve the financial services sector. Pay UK Chief Operating Officer, Matthew Hunt says in a statement: “There can be many benefits gained from switching current accounts and our aim is to continue to ensure that consumers are aware of the options available to them.”
When should small businesses change banks?
The data also shows an increase in the number of challenger banks on the market, specifically targeting SMEs. So, when is it a good time for a small business to change banks?
- You’re getting hit with big banking fees
There are all kinds of banking fees your business might be charged, ranging from ATM fees to overdraft charges. Statistics show that in 2016, the big banks made more than £27 billion in overdraft charges alone. However, it’s not only big banks that charge fees.
When opening any kind of account with a financial provider, you should carefully check whether there are any hidden fees. You may find that accounts require a certain number of transactions, for example. Overdraft fees can be incurred by just one unplanned for outlay. If your business accounts are constantly incurring fees, it’s time to look for another banking provider.
- You’re not happy with the customer service
If you find you’re unable to speak to someone about any problems you have with your business bank account, it’s time to look elsewhere. Consumers are increasingly demanding better customer service and expect to be able to access it fast. This is why challenger banks are able to disrupt the traditional big banks. They are offering 24/7 communication and easier access to assistance.
- You never use offline services
If you’re with a traditional bank that offers branch assistance, yet you never use it, it could be time to switch. You’re generally paying extra in fees for services you don’t even use. More businesses bank entirely online than ever before, and just don’t need the in-branch service.
- The bank’s website and app just aren’t up to scratch
This may sound like it’s not a big deal, but when you use online services, whether desktop or mobile, it’s important that they work properly. An app or web service that has a confusing user interface or has too many unnecessary steps can be a deal-breaker. It’s easier for businesses to stay in control of their business accounts and cashflow if they can access everything they need easily and quickly.
James Turner, Managing Director of Turner Little Limited says: “Double the number of small businesses are switching banks compared with last year, showing that consumers are reacting to the increased offerings from challenger banks in the sector. The Fintech and banking disruption caused by challenger banks is in direct response to the changing needs of business, and in particular from SMEs that are demanding more from their financial services provider.”
“This healthy competition is long overdue in the financial services sector, which has long been out of reach for many small businesses and self-employed business owners. The Government recognises the importance of the SME sector in the UK as the main driver for the country’s economy, and the more steps taken to open up competition in the banking sector, the better it is for small businesses.”
“Business owners should take stock at regular intervals and look at whether they are getting the best, and cheapest, service they can from their financial provider. If not, there is no reason why they shouldn’t shop around until they find the best services for them, whether that comes from a traditional big banking institution or a challenger start-up.”
About Turner Little
Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.