It might be difficult to see right now, but banks are slowly becoming irrelevant. Due to the rise of financial technology firms (such as us, FundX), banks are having to compete based on the technological elements such as apps and user experience, coupled with more traditional such as customer service.
Choosing the right bank for you:
Firstly, let's start with finding the right bank for you. For business banking, we're going to take a look at some points of difference to look out for when choosing a bank for you.
Size - In years gone by, size of a bank mattered, because there was always a risk of default. In the post GFC world, this has become somewhat irrelevant.
Customer Service - Generally, smaller banks have the upper hand here. It's often stated that banks try to minimise the customer service element, because they don't do it well, Generally the best customer service comes from banks that manage the relationship through as few people as possible.
Branches - Although this seems like a small detail, when it comes to business banking, branches matter. Consider the latest renovated branches for some of the larger banks, with their resident business managers, and compare it to "your local branch", which probably hasn't been touched for 15 years and is on the verge of closure.
Choosing the right account
It's important to recognise what the key elements of an account are, before making a decision on what a good account looks like. Here are three important factors that you'd want to look out for:
Rate - Most business accounts come with a certain rate for interest earned, but may hit you with hidden fees at a later date.
Fees - Business Banking is big business, and some business accounts have settlement fees, account keeping fees, and even withdrawal fees. Make sure your account has benefits to match the fees, so you don't get a bad deal.
Benefits - Benefits of an account can be anything from a free bottle of wine to RSA token security. Benefits are often put in place to incentivise businesses to retain their accounts with the bank, and often bigger benefits can come with tenure.
The right product
Most banks don't make their money from account fees, they make their money from financing products and loans. These products are incentivised to maximise profits. Loans often have a lock-in period, with a minimum term and a large payout fee to disincentivise businesses from paying out their loan.
When choosing a loan product, the right product might be outside of a bank, and there may be an alternatives available just around the corner.
FundX offers invoice financing, a genuine alternative to loan products offered by a bank. If you'd like to consider this option, get in touch now!