Recent research conducted by Savings Champion and commissioned by Cynergy Bank reveals that the United Kingdom’s small and medium-sized enterprises (SMEs) are receiving subpar value from the country’s major banks.
The study underscores a prevalent issue where businesses are offered lower interest rates on their banking products compared to retail customers, with few exceptions.
The investigation found that across the board, business current and savings accounts at major UK banks yield lower interest rates.
Notable exceptions include Nationwide’s 1-year Fixed Rate Bond Business Rate at 4.90% and Cynergy Bank’s Business Current Account, which offers a competitive 1.5% on balances up to £25,000. Cynergy Bank stands out further with its Business Saver account, delivering a 4.00% AER, significantly higher than its competitors.
In an industry where business customers often settle for negligible returns on their deposits, Cynergy Bank is making waves by introducing a Business Current Account with a 1.50% interest rate and a 12-month fee-free period for new clients, aiming to attract business owners seeking better value.
This offering is a stark contrast to the industry norm where, except for TSB’s Instant Access Account (Business) that provides 1.50% on balances over £5,000, business accounts typically earn lower interests compared to retail accounts. The disparity in returns is striking, with differences ranging from 0.06% at HSBC to 1.1% at Cynergy Bank for a £10,000 deposit.
Anna Bowes, co-founder of Savings Champion, commented on the findings, highlighting the unfair treatment of businesses in terms of earning interest on their cash reserves.
She praised Cynergy Bank’s initiative to pay interest on business current account balances, a move uncommon among the largest high street banks. Bowes advised businesses to consider transferring excess cash into savings accounts for better returns, although she cautioned against expecting significant gains from high street banks.
Nick Fahy, Chief Executive at Cynergy Bank, expressed his concern over the treatment of SMEs by major UK banks.
“This research shows what many SME owners already know – they are short-changed by the big banks in the UK.” He emphasized Cynergy Bank’s commitment to offering businesses a new standard of value and service, highlighting the clear charging structure and financial rewards for in-credit balances as key benefits of their new Business Current Account.
This research and Cynergy Bank’s response underscore the growing awareness and dissatisfaction among UK SMEs with the banking services provided by major banks. It also highlights the emerging opportunities for challenger banks to redefine value and service standards in the industry.
