Business banking exaclt the most stimulating topic, but getting it right can save huge amounts of haste. Experiences between high street banks and internet banks are not only different, but customer experiences are also wide ranging, so my experience here is subjective.

It is also worth adding that it is very much up to date with the ones I quote.

Every business is different. Everyone has different products, services, skills, time to dedicate, and everyone has different comfort levels with technology too.

A good business, in my humble opinion can only truly be uncovered when something goes wrong. When things go right, it's simply business as usual. The lucky thing for readers to benefit from, is that I'm fussy when it comes to making the right decision on something I don't want to be chopping and changing with. This, gave me great exposure to the good, the bad, and the ugly sides of each of the three I am quoting below.

Needless to say, this is a reflection of my experience, either of my own business, or of a business I have helped support, and my not be a reflection of the service provided to everyone.

I'm also the sort of person that likes to deal with real people for any questions, as opposed to technology, chatbots and automated responses. I'm the one who prefers to queue at a supermarket for longer, to say hello to the cashier, than to do the scanning at an automated till. Not everyone is like that, an I'd like to think I've covered this too.


Some businesses need to consider access to money withdrawals, deposits, different currencies, card payment handling, statements, as well as who can access the accounts.

I have tried to touch on each of these to provide my view.

How do Banks Make Money?

Banks make money in two main ways. The first is that they using your money that you deposit, to invest wisely elsewhere to give themselves a good return. They can use it to loan to other customers, or they use it to invest in everything from real estate, stocks, shares, bonds, or any other investment vehicle they choose (within the confines of regulatory restrictions). The second way they make money is by selling services, often as the middle man, charging fees to cover their costs, such as charges for overdrafts, interest on loans, currency exchange fees, reclaiming on defaulted debts, or credit card handling charges.

Overall, they make a profit from using your money to make more money. By being on the pulse of the best investments, they can make large quantities if invested wisely, which is then used to cover the overheads.

Before we compare, we must realise that the key word in banks is 'Risk'. Every decision a bank makes is carefully weighed up as invest-worthy by analysing risk. Bigger banks may be able to carry more risk, and some banks are even considered too big to fail, able to absorb huge costs if a risk does not end favourably.

Large institutional retail banks (like HSBC, Barclays, etc.) also know as the "High street banks", have the biggest physical presence, but also have the bigger overheads where it comes to real estate, and staffing, by comparison to an 'internet' bank, such as Revolut or Starling.

Small banks may be more nimble, be designed to be more efficient, an may even be more innovative than the high-street banks that get away with charging for the same or similar service, and their justification is often that of perceived risk. Reality, however is that regulations make it quite hard for a bank to fold unless as a result of an over-powered rogue trader or internal fraud, both of which being increasingly more unlikely.

Smaller banks may have lower overheads, but also their smaller presence means they cannot ride the 'risk' wave in the same way as a larger bank. This is why banking licences help offering some protection against a bank that over-exposes itself to risk. Revolut grew surprisingly big without a banking licence, although in the last year or so, has managed to secure one, meaning that HSBC, Revolut, and Starling, all have a licence, and therefore offer varying degrees of consumer protection.

So that's a point to both the high-street and internet banks, for providing proof that they won't simply be here today and gone tomorrow.

But what has this got to do with choosing a bank? The only reason worthy of the above explanation is for you each to ask yourselves what your view is on risk. Are you comfortable ony with a branch you can walk into, or can what you need be done over the internet?

I've banked with HSBC for years and years, and even was fortunate enough to work with them at their HQ for a while, albeit many years ago. As a company, I found them to be honourable, friendly, innovative, and one that encouraged teamwork. As a customer of the bank, my experiences were always great with certain branches, and friendliness was almost always equally met (*).

That's a point to the high street bank for having real people. Sadly, that's also extra costs that they need their customers like us to subsidise.

As a retail and business banking customer, I was only a handful of times made to feel less than significant, and response times by phone were always good. In branch, the more unusual questions were still known to most staff, who were keen to otherwise find an answer, except in London, where I was simply told to phone a helpline.

My only issue, being a low profit business, of continuing with HSBC was that of cost. As a free banking customer, I had no complaints. Once I started to have to pay, it seemed like an unnecessary cost that could be avoided. It may have been 'just' around £6 a month, but many services were also being cut from being available over the counter, forcing you to use machines, or simply not be able to benefit from that service.

Since I'd rather have the £6 in my pocket, than to give it elsewhere, I was always on the look out for reliable alternatives. I was pleased to meet someone at an exhibition who worked for Starling Bank, and introduced me to their business offering.

That's a point against the high street banks which apply fees to bank accounts.

Named after the silky smooth insectivorous bird that beautifully swarm together, it instantly did not give off the same mental imagery as an institutional high street bank. For me, this was no bad thing, as many of the high street banks were often dull, slow, even oppressive, making you feel inconvenient, and not special. Leaving behind this image was one I wasn't concerned with at all.

Starling started by only offering business bank accounts, and for standard businesses of my scale, this is free. (I assume they have large corporate accounts, but don't know of their pricing, if any). To begin with, Starling only offered access on the app. Set-up was surprisingly quick, and easy, and the app very smooth. The risk of being locked out of the account was one that I investigated, but with your account locked to your telephone number, and supported by your email, recovery seemed like it would be straight forward. Starling now offer a personal account too, meaning that all three banks on comparison here cover both business and pleasure.

Revolut, which started for non-business customers, then launched a very costly business bank account finally moved into offering a free business bank account. This coincided nicely with my own needs, and so went through the accunt creation and verification process. Sadly, the screening process was not quick, and involved a huge amount of chasing. Customer service was slow, and communication with them wasn't easy, having to explain everything many times over, and being hit and miss on who was on duty. Even getting a sort code and account number for putting on an invoice took what felt like forever, causing me to nearly lose out on being paid, but eventually it was done.

HSBC, with their more institutional feel app, also worked well, but wasn't quite as intuitive. Knowing HSBC, however, I know it won't be long until it is overhauled to catch up.

Point to all three for good clean apps. HSBC wins for features, Revolut wins for ingenuity, and Starling wins for being the most robust feeling of the internet banks. But on this, I only award one point to Starling, as both of these allow you to click on a record and add a note, or even a photo, allowing you to more easily remember what a transaction was for. If you've got a lot of transactions, or a bad memory, this truly is invaluable, and something I imagine they all will end up following.

Starling and Revolut lack a high street presence, so bank transfers, standing orders, direct debits, or connection with card payment companies, such as Square, Sum-Up or even Paypal, are the easiest way to get money into the account. At present, I'm not aware of any other way (but will update this post if I find information to the contrary).

With Starling only focused on business banking, it seems to have got the journey right, both for interaction simplicity, and for function. Customer service was, again slow, with enquiries joining a queue, but once answered, similar to Revolut, the bank account is plain sailing. On these points, HSBC wins for response time, but for features, they are all about the same.

Point to HSBC for the faster customer service by far. With a choice of over the counter, phone, or keyboard, this caters for the vast majority of ways to interact.


Next I shall stray into the world of plastic.

 

(*) We all have good days and bad days, and the vast majority of staff were friendly and communicative. Some (albeit very few), on the other hand (especially in London), were a bit too stressed, and keen to 'move on' to the next customer with lower levels of patience or tolerance levels for engaging in any conversation.

 

 

HSBC, Starling, and Revolut offer a payment card. By default, HSBC uses VISA, while Starling and Revolut offer Mastercard. All are available free with the account.

Starling and Revolut allow you to activate or disable your card from the app. Although I've not tested how instant this is, once a card is disabled, the liability for its use shifts away from you to either the receiving merchant, or sometimes the bank.

That's a point for the internet banks.

Revolut allowed a card to be activated, without needing to confirm anything, but Starling required the app holder to confirm something about the new card. Even though it probably makes absolutely no difference in the overall risk, the little extra Starling step gave me (a relatively risk confident person) a sense that Revolut wasn't perhaps as secure. It's funny how a little thing, often of no significance, can sway us in a decision or perception.

 

Revolut offers one very interesting tool. On an NFC smartphone (that's about 95% of them), your phone can be used for making card payments. It can also show you the 'virtual card' details, which can be used online too. This, in essence, gives 2 cards that can be used, which may be useful to differentiate between employee spending. So one could be used for internet shopping, or as a travel card, and the second could be used for in person purchases only.

That's another point to Revolut.

 

All of these cards could be linked to Google Pay, Apple Pay, Paypal, or similar, making it easy to send or receive funds, and use on the go. No special points for this.

 

As for the taking credit cards, this is always an add-on service by banks, and one which is a matter of preference. In any case, they can all be recipients of money, raltaively quickly, from whoever processes the card payments. If you do intend to take card payments, please do your research on who is liable for fraud, and how to best protect yourself, as the reality is far different from the carefully worded sales pitch.

If you plan to take credit cards, please see my other blog posts, and the minefield of merchant protection, the dangerous world of chargebacks, and the over the top costs of some payment service providers and merchant accounts.

Currencies is another point of interest.

HSBC and Revolut offer the ability for accounts in different currencies. HSBC's comes at a cost per account after any trial period, but Revolut is so simple and easy, you can accept any currency from any country, and keep it in that currency, wth the greatest of ease.

That's a huge point to Revolut. (if international payments is your thing)

Exchanging between currencies is always a money earner for banks. Most of the time, it doesn't actually happen, as they just dip into and out of existing pots, so currency exhcnage shouldn't be so expensive. Revolut and Starling both try to use this as a selling point, making them both far more attractive.

Revolut actually lets you prepare money in that currency, so you can send it when you want. All in all, for currency, Revolut is loads more flexible than the other two by far.

Another point to Revolut.

 

If you have a business, you need your accountant to be able to have the right information. Until more recently, getting hold of statements from the internet banks wasn't as easy as it should be. Thankfully this is changing

Despite being internet banks, neither Revolut nor Starling doesn't really do well on this front on the mobile, with smooth clean apps, without too much function over the basics. If you're sat with your accountant without your laptop, you're a bit stuck.

Sadly, Revolut are only able to export an excel type (CSV) file, while Starling able to do CSV & PDF.

One point to HSBC and Starling. Sadly, this is a big point, as not many accountants will trust the authenticity of a CSV, as opposed to a nicely formatted PDF, so think Revolut should lose a point for this necessary feature.

 

All banks should now be available for banking through the internet.

Starling has has recently allowed you to use your computer to log in, where statements (or transaction records) can be easily obtained. https://app.starlingbank.com/login

Revolut can be accessed https://business.revolut.com/ where many features are avalailable, with many more being built as they grow.

HSBC's business portal https://www.business.hsbc.uk/ has been a good clean site for some time, and for internet banking cannot be faulted.

 

Next, let's look at online customer service.

 

Customer support awards top prize to the big boys, with HSBC winning this for response rate. Revolut have majorly improved, but the internet banks aren't as fast.

Despite implementing AI machine learning chat-bots, the workflow behind the scenes isn't really up to as much as we might hope. 

On the phone, however, all 3 performed well.

 

The big thing to say is that they are all changing. As they grow, as apps are developed and enhanced, and as they improve their automated workflow, the business banking experience will only make it more staight forward, and seamless. After all, who honestly wants to interact with a bank for fun?

 

The highstreet banks may be more feature rich, but there's a price to be paid after you've settled in for the trial period.

If you're happy to change when fees kick in, then high street offerings are probably the better option if you need face to face time. As for me, as much as I think Starling has the better look and feel between the internet banks, I think Revolut is the one that wins.

Once the statement download in PDF format is available, and once the ability to add a note and photo to each transaction is added, and once the app becomes more feature rich, Revolut will have everything that an account should have, barring the high street presence.

If they start to partner with shops and outlets, like the couriers such as My Hermes or Whistl do, to provide 'quick & easy' face to face services, such as coin changing, or cheque sending (even though cheques are barely used today, and mobile apps, like HSBC allow someone to take a photo of a cheque as a deposit), this would truly be the icing on the cake in the world of internet banks.

 

Until then, it's a progressive race of features from them all. With each business having slightly different needs, the choice is down to what the customer really needs. For most, however, the free business bank from internet providers really is something to consider, with high street banks either chasing these customers, or sticking to those who absolutely need the comfortand peace of mind of a face to face service, that only a high street bank today can offer.