Choosing the right bank – woolmerandkennedy

Let’s face it… Banks have not covered themselves in glory in the past few years. Architects of the credit crunch and slow to respond to the pandemic, banks, overall, in my opinion, are not friends to business.

However, they are a necessary evil; when you are starting a business, you will need a business account and potentially other banking services as well. Hence, it’s essential to do your research and pick one that’s right for you.

So which bank do you choose for your own start-up business? We do not endorse any bank, but we can give you a few things to consider when making this difficult decision:

1. Do I need a branch?

Will you need to go into a branch and if so, will you need to go in on weekends?

In response to the increase in online activity and taking away one of the last bits of convenience for their customers, many banks have closed their smaller village branches. They are now only really located in town centres and shopping centres. However, most big towns have more than one bank that opens on a Saturday and Metro Bank opens on a Sunday. So, if a branch is essential, then Metro Bank might be a good option. Many banks also let you pay in and withdraw cash at the Post Office, so it’s worth checking whether this option is available if it would be more convenient for you.

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2. Do I need an account in a hurry?

Banks seemingly operate in a different time dimension to most of us – many banks are taking two weeks plus even to meet you to set up an account! Again, Metro Bank shines here – the last time I checked, they can get you set up in 2 hours with a walk-in and online bank, Starling, can get you set up in less than an hour from your PC. So, if you want an account quickly and easily, then Starling Bank is a great option.

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3. Am I worried about the cost of accounts?

Fees generally start at £5 a month, but most banks offer some free banking periods. For example, Barclays have a start-up FREE tariff, HSBC also has a start-up period, and Santander offers free banking for start-ups for 18 months. The online accounts, such as Starling offer free banking.

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4. Do I want a relationship with a bank manager?

Unfortunately, to get this, you are going to need a time machine and go back 50 years. I fear you will be just a number to the banks and will be unlikely to get access to talk directly to anyone who knows you or your business. Of course, they all use call centres and offer varying levels of service.

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5. Will I need lending in the future?

An important consideration is whether you will need lending in the future. Starling Bank has an overdraft for an EAR (Effective Annual Rate) of 15%, which is higher than HSBC 9.99% and Barclays 10%. So, if you are in need of borrowing, then compare the rates carefully.

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If you thought choosing a ‘bricks and mortar’ bank in the anticipation that they will get to know you and your business and help you grow, then you are in for a shock. Sadly, those days seem to be long gone.

So, in my opinion, you might as well choose an online option, such as Starling Bank, just because they are easy to set up. Then set up an appointment with a ‘brick and mortar’ bank to hedge your bets.

Don’t take our word for it.

If you are unsure, google this: “[Insert Bank Name Here] Business Bank Review” and take a look at their Trust Pilot Scores. Here are the ones we found….

Barlays 1.4
HSBC 1.4
Natwest 2.9
Lloyds 1.2
Starling 4.5
Monzo 4.4

Just be sure you do your research based on your needs, and as always, if you have any questions, please contact us for advice.