Business banks – the challengers

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22

Jun

Business banks – the challengers

posted by: Jason Hulott

Ten years have passed since the financial crisis of 2008 and in that time traditional patterns of British banking have undergone a sea change.

Although the changes have been seen across the whole banking community, the latest challengers to established institutions are poised to revolutionise business banking.

Since newcomers are appearing on the scene all the time, the picture is subject to still further change, but here are thumbnail sketches of some of the leading challengers:

Acorn

  • Acorn Accounts for Business is operated by Spectrum Card Services Limited and targets business banking for small enterprises;
  • accounts are managed entirely online, although there is also a telephone help desk and an app for use on your smartphone;
  • deposits and withdrawals may be made through high street branches of Barclays Bank;
  • account fees are from £12.50 a month (depending on the type of account);

Card One Banking

  • Card One Banking is another online and app-based provider of business finance – through loans from third-party providers;
  • applications to open an account may be made online and are typically completed within three hours;

CashPlus

  • launched in 2013, CashPlus, achieved rapid growth, thanks to the possibility of opening one of its business accounts with practically immediate approval;
  • accounts are available to businesses, government departments and charities whatever their size (there are no minimum turnover requirements), whether the enterprise is a startup or an established business;

Metro Bank

  • when it was launched in 2010, Metro Bank became the first new British bank to open high street branches in more than 100 years;
  • it refers to its branches as “stores” and also offers digital and telephone banking;
  • emphasis on customer service;

Revolut

  • Revolut was founded in 2014, with the specific objective of attracting businesses involved in international trading – it now operates an estimated 50,000 business accounts across Europe;
  • according to a report in the Financial Times on the 6th of June 2018, Revolut is also planning to offer commission-free share trading services;

Starling Bank

  • Starling Bank gained its banking licence only in March of 2018, but has already signed up some 5,000 customers and aims to have 6% of the market in current accounts for businesses by 2025;
  • it offers app-based and online banking services, primarily targeted towards small businesses – those which it calls “micro enterprises”, with a turnover of less than £1.7 million a year and employing fewer than 10 people;

Tide

  • Tide was launched in 2017 as an app-based banking service, primarily for small and startup companies and freelancers;
  • in its first year of operations, it claimed that one in 12 business accounts opened in the UK were with Tide – placing emphasis on the speed with which it is possible to open such an account (5 minutes).

The table below presents a synopsis of the key features of the services offered by these so-called “challenger” banks for businesses.

Bank nameAccount feeAvailable toOverdraft facilityNotes
AcornFrom £21.50 a monthSmall enterprisesNoneConfirmation of address and identity required, but no credit check required
Atom BankNo fee for opening an accountSMEsNone – secured loans onlyNo physical branches – just smartphone and tablet apps
Card One BankingApplication fee £55 + £12.50 monthlyUK-registered small businesses – sole trader, LLP, or partnershipNone – prepayment Corporate MasterCard only Confirmation of address and identity required, but no credit check required.

Restricted accounts for businesses with less than £2 million annual turnover

CashPlus£65 annual account feeAny UK-registered small businesses – sole trader, LLP, partnership, or charityiDraft – subject to approval After payment of £65 annual fee, no monthly fees.

Branch facilities via the Post Office

Metro BankNo fees on business account balances over £5,000Small businesses, medium-sized businesses (annual turnover of more than £2 million) to international corporatesYesLong and short-term business loans and invoice financing
RevolutNone – free receipt and exchange services on up to 25 foreign currenciesParticular focus on small and medium-sized businesses involved in cross-border tradingNoRevolut does not currently have a banking licence, but offers its banking services on the basis of an e-money licence
Starling BankNo fees for “micro enterprises” (with an annual turnover less than £1.7 million)Small businesses and sole traders (“micro enterprises” employing fewer than 10 people) – and upwardsYesDigital app and online banking services, plus accounting and invoicing services
TideNo monthly fees – transfers at 20p a timeSmall – and growing – enterprises and freelancersNoCompletely online, not able to pay in cheques or make international payments