This year has seen banks such as Redwood launch new business savings accounts and, earlier this month, the bank revealed the accounts had reached the top of the best buy tables.

Meanwhile, banks in the process of launching – such as Civilised Bank – are planning to focus on providing a better savings service for businesses.

Why should businesses switch to specialist banks?

“The first obvious element is better rates,” said Rachel Curtis-Bowen, chief customer officer at Cambridge & Counties.

“We don't have the inert balances held by the large banks and therefore we have to be more competitive to entice people away, otherwise they just don't feel it is worth the hassle of opening another account.”

Stephen Fletcher, managing director of commercial banking at Arbuthnot Latham, added: “With the major banks continuing to restructure and retrench, reducing their balance sheets and with a good level of liquidity generally available, sadly mainstream market rates for deposits on offer to owner managed businesses in the SME sector continue at all-time lows.

“However, there is an alternative, with smaller more specialist banks stepping in to offer alternative products to fill the gap.

“With the newer banks to the market offering more competitive rates for notice accounts and fixed term deposits, this should be attractive for those businesses who can tie up cash for the medium term (90 days) to longer term, from six months to two years.”

What are specialist banks offering and how do they differ from traditional banks?

Joel Perlman, co-founder of OakNorth, said it offered fixed term deposit accounts – ranging from three months to one year – and there were a number of key differences between it and the mainstream banks.

“Firstly, we offer much more competitive rates – for example, 1.31% for a 12-month fixed bond, which is quite a bit more than the 0.65% rate offered by some of the larger banks.

“The minimum and maximum balances can also vary quite a bit – we accept minimum balances of £10,000 and maximum balances of £1m, whereas some of the larger banks only accept a minimum of £100,000 and a maximum of £5m.

“I'd also argue that we're much more transparent than a number of the larger banks as we publish our rates on our website, making it very easy for businesses to compare our rates with other providers.”

Joel added that OakNorth allowed its depositors to open, fund and manage their account online, whereas many of the larger banks only offered this over the phone or in branch.

Gary Wilkinson, CEO and co-founder of Redwood Bank, explained it focused on clear and simple savings accounts, which are easy to use.

“We currently only have two savings accounts, and both are straightforward to understand and supported by a specialist service team who are passionate about providing excellent customer service.

“Furthermore, both our accounts currently appear in national best-buy tables, demonstrating that the specialist bank interest rates are generally more competitive than those of the mainstream banks.”

Meanwhile, Close Brothers Treasury added that specialist banks tended to serve a different set of savings requirements.

“We offer longer term options and competitive rates for customers willing to lock away their funds for longer periods of time,” a spokesperson for the bank told Specialist Banking.

“We support this with a team of business development managers, who provide customers with a personal service focusing only on our savings accounts and deposits.”

Rachel added that the process and flexibility offered by specialist banks was different to traditional sources.

“We've worked hard to keep our business savings application form and process as short and painless as possible and – as the smaller banks don't generally have large legacy systems and complex product ranges to cope with – this ends up in a quicker and easier application experience for customers.

“I believe we are also more flexible in terms of the types of accounts we can open as we are dealing with lower volumes and have smaller teams with shorter lines to management levels where decisions can be made.

“This makes it easier for us to deal with more complex accounts, such as trusts and pension deposits.”

Stephen felt that by combining better rates with a 'human being' to talk to and there being no need for the full banking transfer in many cases, there was merit to shopping around.

“With the smaller specialist banks like Arbuthnot Commercial continuing to grow, SME deposits are attractive to help the newer banks in the market get a foothold in this area.

“With often quicker account opening times, a positive desire to take on new clients and experienced bankers available to help, we believe that we offer better value, improved service delivery, plus competitive rates to deliver a better return on hard-earned SME cash.”

To find out which specialist banks offer business savings accounts, check out the Banks section on the Specialist Banking website.