High street banks continue to close down at an alarming rate as their customers turn to online competitors. A modern approach to banking continues to draw in impressive numbers. But how are businesses reacting to the change? Comparison site NerdWallet suggests business owners may be joining consumers.
A new study by NerdWallet found that business owners and leaders trust online banks more than traditional, conventional banks. This shift in opinion appears to be displayed as many of them have already moved to online-only banks.
The study involved a survey of 500 business owners and senior decision-makers in the UK. The survey covered their opinions and experience of online banks in regard to running a business.
Fifty-three per cent of UK business owners were found to trust online-only banks the same as high street ones. Meanwhile, 28 per cent said that they currently trust online-only banks more than their traditional counterparts. Only 10 per cent of the 500 business owners surveyed said they found conventional banks more trustworthy. The remaining nine per cent were unsure.
The results clearly display a strong shift in favour of online-only banks. These opinions also appear to be backed up by vast numbers of business owners moving over to online banks.
Traditional banks continue to lose out as online competitors capitalise
Forty-four per cent of those surveyed had already switched from a traditional bank to an online-only one in the last year. NerdWallet also looked to understand the specific reasons behind why those that had switched, made that decision. The most popular reasons were as follows:
- Found that online banks offered a better product – 65 per cent
- Online banks had a more suitable pricing structure for business – 63 per cent
- Online-only banking made more sense for their type of business – 61 per cent
- Speaking to an advisor took too much time or was too complex – 59 per cent
- Already used a digital bank for personal banking and wanted consistency – 47 per cent
- Found it overall easier to do all banking online – 37 per cent
- Their business was completely online – 13 per cent
As could be expected, the most prominent reason behind switching is that online banks are offering better products. However, as 59 per cent of people explained that speaking to an advisor took too much time, it becomes clear that even a face-to-face interaction is not valued as highly as it once was.
While many would assume that the main benefit traditional banks have is in-person physical locations, it is clear that many would rather organise their banking online without having to speak to advisors.
It appears that business owners across the UK are recognising the benefits that only-online providers can offer them. As more people become aware of what new technology options can offer, and as they embrace them, traditional high street banks could continue to suffer.