It was a couple years ago when my friend pulled out a bright coral coloured debit card and when I questioned what bank card it was from he told me it was Monzo, he then proceeded in explaining to me the features of his new bank account that help him manage his money better. According to Finder one in ten people in the UK have switched to a digital only bank like Monzo, Revolut or Starling for their personal banking, two-thirds of respondents said they plan to convert fully to a digital bank in the future. Now this post is in no way me giving advice on whether to choose a traditional high street bank or a modern challenger bank but purely to explore the benefits of both when it comes to managing your business' finances. I had another friend who opened a business account with Starling Bank and I asked her why choose Starling rather than a high street bank where she already has a personal bank account. She explained to me 'every time he walks into a branch there is always new member of staff that serves her, there are way too many members of staff that have seen her personal bank account details just to process a minor request. Starling gave her the opportunity & autonomy to manage her finances simply from a smart phone without walking into a branch. So I began to look into this in a bit more detail as I wanted to explore the benefits in which I could possibly gain from using the services of a challenger/digital bank account for myself. I looked at a few of these modern banks so what I will do is summarise the features for you, but also provide links for you to have a look at these features in more detail. The challenger banks I looked at were ANNA, Tide, Countingup and Revolut. The main benefits/features that these banks offer are: smart invoice facilities, flexibility of cross currency payments/transactions, book keeping software, tax/accounting services and quicker to open a bank account. Technology and fluidity from challenger banks are certainly advantageous and can appeal to a tech-savvy audience. According to research by Finder when measuring customer sentiment for digital and high street banks during the pandemic. "over 800,000 social media posts from customers revealed that digital banks saw a sentiment decline of almost three times that of high-street banks during the pandemic. On average digital-only banks’ customer sentiment fell by 14pp compared to just 5pp for high-street banks". This is an interesting statistic as it questions the reliability of challenger banks as opposed to longstanding traditional banks, a lot of people would have guessed that trust was lost with the average high street bank since the recession. This shows that traditional banks may have more stability & resources to still support their customers through the pandemic and unprecedented times in comparison to the modern banks. This leads onto my next point in favour of traditional banks as it is likely that the larger traditional banks can offer facilities that will help businesses in testing times. I am referring to large business loans or overdraft facilities to keep businesses ticking over, this may not be the case for small banks that have recently entered the market.
It begs to answer the questions: Have society lost faith in the traditional banks and now turning towards modern banks? Can traditional banks meet the needs of the modern businesses? Have the average high street bank lost the personal connection they once had with their customers and becoming more detached? Are the high street banks systems outdated? Is the emergence of challenger & digital banks just a phase? Are challenger banks stable with the emergence of new competitors? There are so many questions, I would be interested to know your opinions on this. Please let me know what you think, who you have chosen to business bank with and why.