According to the independent website Business Banking Insight, 14% of small businesses are "likely" or "very likely" to move banks within six months. But many small business owners say banks are all the same - so what are the alternatives to the high street banks? Rachel Miller finds out
A combination of inertia and sheer hassle has always prevented a lot of small firms from moving banks. But with Government support for making it easier to switch and the launch of the Business Banking Insight website, small business owners now have the information they need on bank performance to make an informed decision.
The Business Banking Insight (BBI) website was launched by HM Treasury in 2013 and is supported by the Federation of Small Businesses (FSB) and the British Chambers of Commerce (BCC). The website rates banks based on the experiences of 20,000 UK businesses. Users can search for ratings based on their own business size.
Anthony Browne, BBA chief executive, says: "This is a great tool to help businesses compare the products and services available from different finance providers. Though the majority of business bank customers are happy with their current arrangements, this site allows any firm to shop around. The switching service now makes it easier than ever to change providers if they find a better deal."
BBI research shows that business give their business current accounts a satisfaction rating of between 59% and 68%. While many business customers are undoubtedly happy with their bank, a significant number may want to change providers.
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Making the move
Hat shop Simply Devine is owned and managed by mother and daughter, Joy Devine and Liz Devine-Wright. The Tadcaster business changed banks in order to cut costs and get a better service, and chose the Co-operative Bank.
"We transferred when our start-up free banking with another bank had expired and it started charging what we thought were excessive amounts. And I can honestly say it's one of the best business decisions we've ever made," says Liz Devine-Wright.
"We enjoy free banking. We don't pay bank charges for simple things like paying money in or taking it out — in fact The Co-operative Bank gives us money in the form of a loyalty bonus on our anniversary date. And I'm happy to say we also receive interest every month."
Like the Co-operative Bank, Triodos is an ethical bank that is increasingly attracting business customers.
Top London recording studio, The Premises Studios, chose to take its business to Triodos because it was dissatisfied with Barclays. "As a business we've always done what we can to act responsibly," says Julia Craik. "Once we've switched our banking we can tell our clients that any money they pay will be going into a sustainable model of banking."
In recent years there has been a number of 'digital only' banks - including Atom Bank, Tandem Bank, Monzo Bank and Revolut - that utilise technology to offer a range of banking services. These join the 'challenger banks' which include Metro Bank which was the UK's first new high street bank in over 100 years. With 40 "stores" in and around London and plans for 110 by 2020, Metro Bank offers long opening hours, online banking and free card transactions abroad. These banks offer the benefits of modern banking systems and online platforms with more traditional banking service and local branches.
Small firms looking for alternative places to borrow or save can also take advantage of one of the new breed of savings and loans providers aimed specifically at SMEs. These include Aldermore, Shawbrook Bank, Cambridge & Counties Bank and Burnley Savings and Loans.
"We launched Shawbrook because we believe there's a need for a bank that does things differently," says Philip George, interim CEO of Shawbrook Bank. "The response we've had since we launched has been fantastic, and shows the demand for honest, common-sense banking really does exist. Shawbrook and other new entrants offer choice, opportunity and optimism to small businesses and individuals who are fed up with lack of choice and poor service on the high street."
Alternative sources of funding and banking
It promises high levels of individual service for businesses and offers current and deposit accounts for businesses, including online banking, as well as overdrafts, business loans and credit cards.
Triodos only lends to organisations delivering social, environmental or cultural benefits. Customers include River Cottage. It offers online banking, business loans including commercial mortgages and foreign currency transactions.
An ethical bank; business customers can access their accounts by phone, in branch, by post, online or at Post Offices. The Co-operative bank offers a range of business current and deposit accounts, including FSB Business Banking offering free banking and a fee-free formal overdraft.
An SME-focused bank offering finance, mortgages and savings products. Launched in 2009, Aldermore serves customers via the phone and a network of regional offices. It offers online business savings accounts, commercial mortgages, invoice financing and asset financing. Since 2009, lending to Aldermore customers has exceeded £8.4 billion.
A specialist savings and lending bank committed to making it easier for SMEs to grow. Launched in October 2011, it offers commercial mortgages, loans and asset finance.
A partnership between Trinity Hall, Cambridge and Cambridgeshire Local Government Pension Fund, this bank offers SMEs a personal approach using business development managers. Services include commercial mortgages, business loans and business savings accounts.
Owner Dave Fishwick set up his "Bank of Dave" (as seen on Channel Four) to provide local businesses with access to loans, refinancing and savings accounts.