What is the difference between high street banks and digital banks ?
In a change from traditional bricks and mortar banking institutiuons, many new and start up companies have chosen to use digital banks for their financial needs. The banking landscape has changed and given rise to digital banking that can offer simplified accounts and services for personal banking, and now these so-called challenger banks have set their sights on business users.
Digital banks provide their services using an online website or a smartphone app and offer tempting incentives like no fee banking or instant money transfer with transparency and unbroken visibility and connectivity. For customers who want an easy banking solution and have limited need for credit or overdrafts, digital banks can be an attractive proposition.
Banks like Tide, Mettle and Starling have been adopted by businesses of all sizes who work in a digitally based environment. As services or work is provided in an online framework, using a bank that operates in a similar is an easy transitiion for businesses who want a ‘smart’ banking alternative.
Are companies still using high street banks?
Well known high street banks like Lloyds and NatWest are still trusted by many businesses to handle their financial affairs. High street banks may have the edge when it comes to companies who have a high cash throughput like resturants or beauty salons and need to make regular cash deposits – something not always easily possible with a digital bank.
High street banks still enjoy a good level of trust among business and personal users with customers feeling assured that their money is safe and securely held. However, with some of the security features and assurances offered by online banks the tide of opinion may be shifting. Some users have grown uneasy about the way traditional financial instituitions conduct business and some have left their high street banks and elected to use digital services based upon mistrust alone.
Consumers are also increasingly concerned about where are how their money is used and shy away from banks who are perceived as using funds to finance projects which may be deemed unethical.
Benefits of digital banking
Digital banks have recognised the need for fast, transparent, and ethical money use and can adapt quickly, responing to customer demand in an agile manner that bricks and mortar institutions may find tough to match. In both personal and business use, digital banks are attracting customers with the promise of minimal or zero fees and charges.
What once seem like a shaky and perhaps unsure way to manage business funds, digital banks have become a shrewd financial decision with a large percentage of small and medium enterprises moving over to a challenger bank in the UK. Along with easy to use apps and websites, digital banking can mean opening a business account much faster and with less paperwork and verification processes than their high street counterparts. New business who need an account can be up and running within just a few hours in many cases.
Digital banks can offer:
- Cutting edge technology
- Fast processing times
- Quick account set up
- Secure processing
- Instant communication
Depending on business needs, digital banks clearly provide many advantages in terms of speed, service, and adaptability. However, if your business needs more complex banking support, digital banks may fall down. This could include things like:
- Cash deposits
- International transfers
- Overdraft allowances
If you are seeking a business bank account it is important to consider the kind of financial functions the company will need to determine whether a digital or high street bank is the most appropriate solution. But for those companies who need a fast and responsive bank for their business accounts, a digital bank may be more than sufficient.
