Being a founder, who spent the majority of my career in financial service, I am familiar with the obstacles small business owners face when it involves banking. It doesn’t matter if you need to open a bank or send money.
Banks can eat up precious time
Entrepreneurs know the truth about “time is money”, and inconvenient banking can be costly. You want to be able to focus on your business, not worrying about it. It is unlikely that you will have the time or ability to visit your bank branch in person, especially if it is during “banking” hours.
The idea of “going to the banks” is outdated and inconvenient. There hasn’t been a shift within the industry towards digital-first, mobile alternatives. While 71% of bank customers bank online regularly, the majority of large banks are not.You won’t be able to open a business account unless you visit a branch.. To make certain transactions, many banks require that you visit a branch. This is not in line with the needs of business owners.
Bank Fees can be costly
It’s crucial to be sensible about how much money you spend when you run a business. Only spend your money on things that are going to benefit your company. It can be difficult to find a business banking option that is affordable. There may be a bank that does not charge maintenance fees monthly, but only if there is a minimum balance. You may still be subject to transaction fees and overdraft fees. These charges can eat into your profits. 2018The top five U.S. bank executives earned more than $1 billionCheck your account fees.
Many business banks are not supportive of small, cost-conscious businesses. This is especially true for pre-revenue companies. This can lead to frustration for founders who may end up paying too much money for services that don’t deliver real value.
Payouts and transfers can be slow
Entrepreneurs need cash flow. Business owners often have to be able to quickly move funds to pay vendors or employees. This can be especially difficult if you don’t have enough cash to cover your expenses. Problem is, the banking system wasn’t designed to move money fast. Instead, banks have standard timelines to help reduce risk.
Slowly, this has changed for consumer products. In the last few years, instant P2P (person-to-person) transfers have been commonplace with services such as Venmo or Cash App. The industry is slower to offer such services for business accounts due to concerns about the impact on profit margins from products like wire transfers.
This is just the beginning of this shift. I believe there will be an industry-wide focus in the near future on faster payments and transfer for business accounts.
Banks have a transactional relationship with their customers
For so long banks have offered only transactional services. They store your money and provide capital access. Unless you have a large corporate account with a high balance you won’t get personalized attention or advice.
You don’t need to have a million dollars to feel valued by your bank as a founder. Banks need to think critically about how they can provide value beyond just banking.
Business banking should not create barriers but break down them
All these obstacles are caused by the fact that traditional banks don’t have access to modern small businesses. Entrepreneurs, especially those in the digital economy, expect quick, simple, and valuable service from all institutions they do business with. Banks should not be an exception.
However, there is hope: despite the fact that these obstacles are present and real today, I believe that the industry will evolve. New digital-first banking options are being offered. New technology and increased competition are causing established banks to slowly correct their course and begin to mimic the transparent, mobile and customer-friendly approach of new competitors. These barriers are already beginning to fall and will eventually disappear.