Can specialist banks help revitalise business savings?
Simon Furnell, chief operating officer at Masthaven | 07:27 Wednesday 19th December 2018
UK businesses have been left underserved for too long – it’s time for specialist banks to step in and revitalise business savings accounts.
UK-based businesses of all shapes and sizes are facing uncertain times in light of existing political and economic instability. In order to brace themselves against continued unpredictability, businesses are seeking a variety of financial solutions to help day-to-day operations run as smoothly as possible. For example, since the launch of the government-mandated Bank Referral Scheme in November 2016, small businesses rejected by high street lenders have been able to source more than £15m.
Significantly, figures released at the end of August 2018 showed that 670 businesses raised more than £12m of funding through the scheme over the course of the previous 12 months, four times the amount raised in the year before.
Current conditions are also placing an additional emphasis on the importance attached to businesses making their cash work harder, and utilising savings to help pay tax bills or invest in new equipment. Having adequate savings in place can provide some relief to any potential change in the air, yet the banking arena has offered few favours for those looking to save or maximise their assets.
A combination of low interest rates and wavering customer loyalty has created a lacklustre savings environment where customer inertia is high. For any competitive business, these factors won’t seem attractive. Indeed, new research conducted by YouGov and Flagstone outlines some of the challenges facing SMEs when it comes to the returns they are achieving on their excess cash (ie cash not required for the day-to-day running of their businesses).
It found SMEs are dissatisfied with the interest rate they are receiving, with more than half earning less than 0.1% on their cash. The results also highlighted that 40% of SMEs feel that the amount of time and paperwork involved in opening new accounts is too much hassle.
So, what can businesses do to improve their returns? And what can banks do to make the experience easier?
Specialist banks could hold the key to unlocking this problem. Many offer competitive rates and a superior level of service compared to traditional high street players. At Masthaven, we also provide an online application process and an innovative product that allows customers to set their own savings term and to manage their maturity options online. Such features offer SMEs greater levels of transparency, simplicity and the ability to better manage their savings, so they remain in control of their money – as well as their business.
Banks that embrace a new way of thinking could well be the catalyst needed to revitalise the business savings accounts market and provide the preferable rates and flexibility that SMEs need. These businesses are not machines, they are living, breathing organisations. No two firms are the same and they need certain levels of flexibility to operate effectively, meaning banks should be evolving with businesses to facilitate growth, not working to suppress it.
Ultimately, SMEs are the backbone of the UK economy and need access to competitive and accessible financial products and personal service which will help their business run smoothly. With technology continually improving and renewed focus on customer service, the time has come for businesses to demand much more from their banks via best-in-class technology, product offering and service standards.
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