Small businesses prefer app-based digital banks

August 31, 2022

While still relatively new to the market, survey evidence shows that most small businesses prefer using app-based digital banks. 

According to research from the Competition and Markets Authority, more SME customers would recommend ‘digital’ banks like StarlingMonzo, and Tide compared to their more established peers. 

The research team asked business account customers how likely they would be to recommend their provider to another SME customer. 

They also asked respondents to rate the bank’s online and in-branch services, their overdraft and loan facilities and their relationship account management services. More than 1,000 individuals participated in the survey, which tracked the number of respondents who said they were ‘likely’ or ‘extremely likely’ to recommend their provider

The results showed Starling Bank out in front with a score of 83%, closely followed by Monzo (79%), Handelsbanken (73%), Tide (68%) and Metro Bank (64%). 

Santander was the best performing of the more ‘traditional’ business banks, scoring 59% in the survey. Santander was followed by Lloyds Bank (58%), NatWest 56%), Barclays (55%), Bank of Scotland (53%), TSB (51%), RBS (50%), HSBC (43%) Virgin Money (43%) and The Co-operative Bank (40%). 

Starling, Monzo, and Tide also ranked in the top three for online and mobile banking services because of the strength of their app-based banking systems. 

However, these banks did not feature in the branch performance category because they don’t have a physical presence. The top three banks in this category were Metro Bank, Handelsbanken, and Bank of Scotland.

Miles Grady, Director of CloudAccountant.co.uk said:

“It’s clear that many small and medium-sized businesses prefer the daily conveniences that come with app-based banking. In many ways, traditional banks just aren’t fit for purpose in the modern business environment.   

We see this as part of a broader trend to the increasing digitalisation of business finance. Cloud accounting software is making life much easier for busy business owners and initiatives like Making Tax Digital means that app-based financing will soon be a reality for most businesses.”

For more information about cloud accounting software and Making Tax Digital, get in touch with a member of the CloudAccountant team here or call: 0808 281 0303.