New Wave of Banking

We are seeing a new era in the way small businesses are running their finances. With cloud based software now being the norm, and the current digital age and AI being more and more relevant, it goes without saying that the banking sector is also evolving.

The traditional high street banks are coming under pressure from the new digital banks popping up in the market, giving businesses more choice and more competitive offerings.

There are advantages to all types of banking arrangement depending on what suits your business, and with a variety of banking options available, you can be sure to find the right solution.

Banks like Revolut and Tide, which are two of the most well-known growing "challenger banks" offer some great benefits over traditional banking, such as very competitive foreign exchange rates and the ease of opening an online account. The challenger banks are ideal for the self-employed and businesses just starting out as it is quick and simple to open an account, and they offer an efficient way to receive money and make payments, whilst charging little or no fees. Their app based interface is easy to navigate and offers useful functionality such as expense tracking. However, it is important to note that challenger banks do not offer the same assurances as traditional banks and may not always be fully FCA regulated, or included within the FSCS (Financial Services Compensation Scheme) protection, meaning that it would not be advisable to hold large amounts of cash in such an account. Ideally a challenger bank should be used in conjunction with another “traditional” account for savings, that are then certain to be protected by the FSCS.

Starling Bank is an up and coming digital competitor of the main high street banks, offering a lower charging model for business banking.  They are more established than the likes of Revolut or Tide as they are licensed to operate as a fully fledged bank and therefore are able to offer all the additional services and protection of a traditional bank. It’s quick and easy to set up an account and is great for a small business. They offer a business marketplace to enable you to integrate with other business apps.

You then have the traditional high street banks (ie Lloyds, HSBC, Barclays, Metro, NatWest).  The bigger banks, although harder to get an account with potentially, do offer further services including higher interest savings accounts, overdraft services, and lending and other financing facilities.  With these banks we would recommend you have a look around at the best offers and choose a bank suitable for your requirements as you may require a local branch. Money Supermarket have a good comparison table. 

Most UK banks now integrate with third party software, including digital accounting platforms, such as QuickBooks and Xero, to make your accounting function more efficient.  The only banks that often don't are European and other overseas banks.

With so much choice in the marketplace, you are sure to find a banking solution that works best for you.

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FUSE is an independent Chartered Certified firm of accountants and tax advisors based in Highgate Village, North London. We provide a dynamic range of services to clients working in property, media, entertainment and professional services. Our clients vary in size from self employed sole traders, small enterprises and medium size businesses. We believe that comprehensive financial planning and sound business financial advice are the keys to growth and profitability.