The UK banking scene has seen significant change in recent years, particularly after the Covid pandemic. Many traditional physical bank branches have closed due to a lack of use, as consumers and businesses alike opt for digital services. Many have chosen to bank with digital-only banks without physical branches. These ‘faceless’ banks are so popular that 44 per cent of UK businesses have made this switch in the past 12 months; according to personal finance website Nerdwallet.
A recent Nerdwallet survey of 500 business leaders found that many business owners feel online-only banking offered better products and pricing structures. For the majority of businesses surveyed, the motivations behind the switch from a traditional bank to ‘faceless’ banking are driven by the services on offer. Sixty-five per cent explained that online banks offered better products, while 63 per cent said they offered better pricing structures.
Despite the recent popularity surrounding digital-only banks, the survey found that, overall, respondents were split down the middle. Forty-three per cent were in favour of such a switch; with the same percentage also opposed.
While many may expect ‘faceless’ options to be less trusted, over half (53 per cent) of respondents trusted in-person and faceless banks equally. Meanwhile, 28 per cent actually put more faith in faceless banks than their traditional counterparts.
However, two in five business leaders (43 per cent) explained they did not know who to speak to if something went wrong regarding digital banking. While trust does not seem to be a significant hurdle for these organisations to overcome, it is clear that more work needs to be done to ensure consumers are confident about what actions to take if they need support.
Switching business bank accounts ‘to save money on monthly fees and transaction costs’
Connor Campbell, a business finance expert at NerdWallet, explained the survey findings: “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.”