The internet and growth of digitalisation has provided cost-cutting opportunities for many industries. Online banking can provide customers with convenience, and the ability to transact at any hour of the day. But there are downsides. New stats show that retail banking groups in the UK are giving internet-only customers a raw deal – and that applies to small business customers too.
Usually, digitalising new areas of the business will offer a monetary saving or some other kind of an incentive. But when it comes to traditional banking, online-only customers tend to still pay as much for overdrafts and fees as everyone else. This is despite the fact that they don’t make use of services providing in well-staffed local branches or on the phone. They are effectively paying for features they don’t use.
In response, there has been an insurgence of new apps and online banks disrupting the marketplace and offering preferential rates to this type of customer. Many of us will use online banking in a personal capacity, but is it suitable for business accounts? There are several benefits to be had by embracing this online-only trend, but it such a move should be carefully considered.
Are there any safety risks?
Unfortunately, online bank fraud is the UK’s fastest growing area of crime – more than doubling from £60m in 2014 to an expected £130m this year. In some cases, losses have been significant. These risks however, are also present in the mainstream banking apps (that are affiliated with the bricks and mortar of an online store). Online banking is protected by the same laws as business done in branch, although there is still a difficult area round claiming when a password or authorisation has been provided during a scam.
There are steps that can be taken to increase security. Atom Bank are building biometric security and AI (artificial intelligence) layering into their software. The latter is so the app gets to know your habits). They’ve even gone one step further and built their core IT systems from scratch, making the process of banking with them more robust and totally bespoke.
Other advantages
This type of banking is not for everyone. If you like to know your bank manager by name, and enjoy speaking face-to-face with someone about your finances, then taking your business in this direction could be the wrong choice. If, however you’re part of a growing group of people who depend on their phones for everything from switching on the heating before getting home, to ordering what you’re going to have for dinner, this could be the technology for you.
Above all else, more competition will encourage diversity in the way that businesses are dealt with by banks. There won’t be a one-size-fits-all approach to business banking, and these new companies will be able to deliver solutions tailored to you.
Could this work for business?
In short, yes. But business accounts tend to involve more money than an individual’s savings, and the technology may need further finessing. The advantages of moving your finances to a bank like Mondo, for example offers a snapshot of the business’s finances. The app (which is due to launch shortly after a beta phase) tracks what is being spent on company cards, updates balances instantly, sends overspending notifications and can block or freeze a card if it is lost or stolen.
As with most digital shifts, business banking online is still in its infancy, but the possibilities are endless. As the high-street brands struggle to keep up and remain competitive with SMEs, it is highly likely that a new way of doing business will emerge.
Content on this page is paid for and provided by Kia Fleet sponsor of the Guardian Small Business Network Accessing Expertise hub.
