Are digital banking platforms suitable for businesses?
Digital banking platforms such as Starling Bank or Monzo have risen in popularity, but are they suitable for business use?
Digital banks have built popular apps for personal users to manage their current accounts from their smartphones. The apps allow users to easily manage their money, make payments and track their transactional activity. The digital banking model has proven popular and now Monzo, Starling, and others offer business accounts. Opening a business account with a traditional bank can be a long-winded process involving branch appointments, submitting paperwork, etc.
The apps used by digital banks can save you a lot of time as users can apply online at any time and get a quick decision, rather than waiting weeks as is often the case with high street banks.
The Monzo Business Lite account is free and an upgraded Business Pro version costs £5 per month. Starling Bank also offers a free business banking service as well as a more feature-rich business account costing £7 per month. Both Monzo Business and Starling Bank Business accounts offer free UK transfers, free ATM withdrawals, fee-free spending abroad, cash and cheque deposits and 24/7 customer support.
The paid-for ‘Pro’ version of both Monzo and Starling’s business accounts add features such as VAT management, spending alerts, and integration with accounting systems which are helpful features for business users. Physical cards are issued to users and they are full debit cards. IBAN transfers are possible on both Starling Bank and Monzo Business accounts. Receiving transfers from abroad is free unless a payment is sent in a currency other than GBP, which results in foreign exchange charges. For businesses that regularly deal in Euros as well as GBP, there are Euro Account add-ons available to users.
Monzo and Starling are regulated by the Financial Conduct Authority (FCA). This means that up to £85,000 of your money is protected by the Financial Services Compensation Scheme if the bank were to become insolvent. Businesses must be UK registered companies or sole traders.
There is a lot to like about digital banking platforms and their business offerings, but there are some limitations too. Both Monzo and Starling have limits on the amount of cash that users can deposit in their business accounts.
These business accounts are generally aimed at small businesses and sole traders so they may not offer the features that a medium to large size business might require.
For further information on digtial banking, please contact Andrew Kershaw on 023 8046 1245.