Monday Motivation: is it worth switching banks?

4 minute read time.

With the recent news that challenger banks are ahead of the big four in terms of customer satisfaction, we consider whether now is the time to consider switching banks.

In our round-up of the news, we’ve definitely seen a focus on automatic enrolment, with a huge jump in fines for non-compliance over the last three months and the government announcing a consultation about simplifying the process. And if you sell zero-rated goods, you might want to keep an eye on what’s happening in the EU.

Top news stories

Businesses failing to meet automatic enrolment deadlines

The number of businesses being fined for failing to provide staff with new Government pensions has rocketed 14-fold in just three months.

Government launches consultation on simplifying automatic enrolment process

The proposal sets out a simpler process for employers to bring their staging date forward, a simpler process for re-declaration of compliance, and further exceptions to employers’ duties in certain circumstances.

Automatic enrolment is biggest concern for 2016

The consultation could be good news, as one in five smaller businesses considered the time and costs associated with the auto-enrolment pension scheme to have potential for a big impact on them.

MPs debate quarterly tax returns

The parliamentary debate was held after a petition calling for the proposal to be scrapped secured more than 100,000 signatures.

EU review could call UK VAT exemptions into question

The EU executive is planning a review of VAT across Europe that might call into question Britain’s right to have zero-rates for food, medicines and children’s clothing.

Time to switch to a new bank?

If you’ve been with your bank for some time, it might mean that you’re happy with them. But, then again, figures show that many businesses find the services they receive to be below expectations.

Even considering the low satisfaction scores, only 10% of businesses said they were looking at switching banks. So what’s holding them back?

Weighing up the pros and cons of switching

We all know that switching accounts takes time, but it could save you money and provide you with access to new services that you’ve never been offered before. As with all suppliers, it’s worth shopping around for the best deal, especially as switching is now much easier than it’s been in the past.

In September 2013, most of the banks signed up to the Current Account Switch Service which offers a free way to change accounts. The new bank takes care of all the paperwork, your new account will be ready in seven days and there’s a guarantee in place if you miss any payments during that time. The service is available on business accounts, as well a personal ones.

So if you think you might be ready to shop around, here are some things to check:

  • Look at the fees. Fees can be a bit complex for business accounts, where there may be monthly charges and also fees for specific services, like paying in a cheque. If you do business abroad, those fees can be significant too. Make sure you’re comparing like with like - Moneysupermarket and money.co.uk can help.
  • Consider overdraft options. While you may want to ensure your account is always in credit, if you might need an overdraft do check what’s on offer and what the costs will be.
  • What services are available? Some banks offer a personal service with a dedicated manager, others might offer longer opening hours. Think about what you need and whether the new options would offer any additional benefits.
  • Look at their reputation. We all know that choosing a bank means picking one that is easy to deal with. The Business Banking Insight website aims to share other companies’ experiences with their banks to help you choose the right one for your business.
  • How will it affect lending? One advantage of staying with the same bank can be their ability to understand how you use your account and manage your money. That can be an advantage if you want to borrow in the future. However, a different bank may be open to lending, so it pays to check.
  • How much hassle will it be? While the switching service makes it much easier to switch accounts, there might still be a bit of disruption. Weigh that up against the long-term benefits of being with a new bank.

How to make the switch as seamless as possible

Before you swap, do speak to your current bank. If they know you’re leaving, they may be able to offer you deals or improvements to your account.

If you do decide to swap, remember:

  • Make use of the Current Account Switch Service. This means your bank will take care of transferring the funds between accounts, as well as the details for any direct debits and standing orders. You may even be able to set it up online.
  • Find out when the swap will occur. It’s important to know if there will be any downtime between your old account being closed and your new one being opened. Try to avoid any payments at that time - if necessary delay sending out invoices by a day and make any payments to suppliers ahead of schedule. If the worst happens, the switching guarantee should cover any fees if you do miss a payment at this time.
  • Tell your customers your new bank details. Don’t just include them on your invoices as regular customers might not check these details and could use details they have saved in their online banking and accounts software.

What about you?

Has your business recently made a switch? What was your experience? What are the biggest pain-points that turn you off switching or most compelling reasons to switch for a small business? Tell us about it here in the Community.