A survey of 500 business leaders conducted by NerdWallet found that many business owners felt online-only banking offered better products and pricing structures.
The British high street has seen quite the shake-up in recent years, with many traditional brick-and-mortar industries moving online – including a new generation of ‘faceless’ banks that operate without any physical branches.
In a survey of 500 UK business leaders and decision-makers, NerdWallet wanted to know more about small businesses’ responses to this alternative way of banking – particularly during a time wherein secure business finance has never been more important.
The survey found that almost half (44%) of business leaders have made the switch to online-only banking within the last 12 months, with many (47%) doing so after already trialling faceless banking in their personal lives.
NerdWallet’s business finance expert, Connor Campbell, comments:
“The current economic crisis in the UK means that, for many businesses, choosing to switch business bank accounts can be a way to save money on monthly fees and transaction costs.
“We found that many of the small businesses that have made the switch to faceless banking in the last year have done so due to finding better pricing structures, or products and services that were more relevant to their individual needs.
“Overall, there is still some hesitation from some businesses in regards to moving to a fully-online bank that doesn’t offer any in-person support – which isn’t too surprising when you consider the relatively fragile economic climate for many businesses at the moment.
“In this regard, traditional banks may still hold the upper hand – particularly when it comes to handling serious issues, such as bank fraud or filing bank claims.”
NerdWallet’s survey revealed that, for a majority of businesses, the motivations behind the switch from a traditional bank to faceless banking are driven by the services on offer. 65% said that online banks offered better products, while 63% said they offered better pricing structures.
Switching to a faceless bank isn’t for everyone, as NerdWallet discovered. Respondents were split down the middle, with 43% in favour of moving to a bank with no physical branches, while 43% were opposed.
Perhaps unsurprisingly, younger generations of business leaders are more inclined to go online, with 82% of Gen-Z (18-24) decision-makers having made the switch in the past 12 months.
However, the survey did reveal that, interestingly, it was those aged over 65 that had a similar level of interest in online-only banking, with almost three quarters (74%) making the switch in the last 12 months. Those in the Gen X or millennial brackets, meanwhile, were the most opposed to change.
Interestingly, despite business leaders being split as to whether they would move to an online-only banking provider, this did not seem to be due to a lack of trust. NerdWallet found that 53% of respondents trusted in-person and faceless banks equally, while 28% actually put more faith in faceless banks than their traditional counterparts.
Worryingly, however, was the revelation that more than 2 in 5 business leaders (43%) said that they did not know who to speak to if something went wrong, suggesting that perhaps there is still more work to be done by faceless banks in ensuring their customers know where to go for support.