Alongside self-employed and side hustlers who are estimated to contribute £125 million to the UK’s economic recovery in 2021, it’s thought that small and medium-sized businesses will contribute approximately £310.46 billion back into the economy. Yet, both segments of the economy still feel unloved by their banks.
Despite the apparent success of neobanks, such as Starling and Monzo, there is still a lack of trust and certainty when it comes to challenger banks (despite the perks). According to a survey of 3,000 consumers conducted by Accenture last summer, just 45% of UK consumers believed that challenger banks would survive the next 12 months.
While these banks are winning millions of new users, many are young and under 30, the majority will not own a business. Those aged 55 and over are the ones leading the way in self-employment, accounting for 38% of limited companies and side hustles formed post-March 2020. But they are more likely to not risk their revenues in a young bank. Many may just stay open a business bank account with their existing bank. That is not always the smart thing to do as previously reported by The Freelance Informer.
Unloved and underserved?
“The smallest end of the SME market has historically been underserved in terms of business banking, with the majority of incumbent institutions focusing on large commercial customers and corporates,” said Marieke Flament, CEO Mettle, NatWest’s e-bank geared for the self-employed.
“This made it difficult for small business owners to get set up quickly, get paid and tax ready. We champion self-employed workers and side hustlers and are dedicated to building our product to serve them and their needs,” said Flament.
Mettle said that it has released a number of features to help make running business easier, like putting money aside from your main account with Money Pots, making payments easier with Apple Pay and Google Pay and offering integrations with accounting software like FreeAgent and Xero.
Are you a Startup with bad credit?
Challenger bank Cashplus does offer a credit facility to startups and those with a less than sparkling credit history, but you must go through a credit application.
Many other banks geared for startups and small businesses do not offer credit facilities. Starling Bank was the only other bank besides Cashplus to offer credit facilities on application to startup companies on the Business Comparison website.
Compare more business bank accounts here.
Personally my main concern with using a challenger bank would probably be from a cyber security standpoint, I can imagine that they would be a target for attackers and don’t necessary have the resources that the big banks do. What happened with Revolut is a really good example of this.