Small Talk: Firms must start to switch banks now it’s much easier

No bank is  launching an  introductory deal to entice small  business customers

Good news for hundreds of thousands of small businesses that would benefit from a change of bank – the banking industry reforms that come into effect today make it easier to do so. New rules that require banks to ensure that individuals can complete the process of switching bank in only a week will also apply to all small businesses with annual sales of less than €2m (£1.68m).

The Federation of Small Business’s research suggests there is certainly an appetite among small businesses to change bank. In a recent survey of more than 2,300 of its members, only 4 per cent had switched account over the previous 12 months, but 15 per cent said they were considering doing so.

Three considerations tend to dominate for small businesses thinking about switching, the FSB’s research suggests. Price and customer service are almost equally important – cited by two thirds of small businesses – but one in two potential switchers is also looking for better local branch access. That reflects the poor deal many banks have offered their small business customers in recent years.

Business accounts are expensive and branch networks have been pared back. On service, several banks have finally begun working harder on their small business proposition, training more specialist staff and building better networks of advisers. Nonetheless, the banks still tend to score poorly in research into customer satisfaction and they are still dealing with the legacy of issues such as interest-rate swap mis-selling and the credit crunch.

The big question is whether the new account-switching rules will boost competition and force the banks to offer a better deal to their small business customers. This is the motivation for the reforms and the evidence from the personal current account market is encouraging. In that sector of the banking industry, these reforms are the latest in a series of regulatory overhauls; each of the previous exercises has lead to a rise in account switching and prompted banks to work harder to retain and attract customers.

So far, however, small businesses hoping the new rules would be the spur for a wave of introductory promotions or price cuts designed to win their custom will have been disappointed. While many banks are using today’s reforms as an opportunity to make a fresh assault on the personal account market, there has been no push on small business accounts.

No bank, for example, is launching a special introductory deal this week to entice small business customers. Nor is there any sign of banks cutting their charges, let alone the sort of price war seen in the personal sector. If anything, the trend on small business bank account charges is for higher fees.

The cynical explanation for this is that the banks know small businesses tend to be much more reluctant switchers than individual customers and that they therefore need to do less work to keep them. There are some good deals available to start-up businesses, but none of the banks are making much effort to win over established companies from their rivals. When churn rates are running at only 4 per cent, banks can afford to take a relaxed view.

The challenge for small businesses is to force a change of attitude. Were switching levels to move closer to 15 per cent, you can be sure the banks would offer more competitive deals.

Reaching that stage in the personal current account market has taken time – consumer groups have been encouraging individuals to change bank account more regularly for the best part of two decades. But small businesses have everything to gain from moving faster, particularly now the rules make switching so easy. It’s time to hold your bank to account.

Malaysian messaging firm poised for a float on Aim

Macromac is the latest Asian business to announce plans for a flotation on the Alternative Investment Market.

The Malaysian company will make its debut on Aim next Monday, with a market capitalisation of around £10m following the listing. The business is raising £450,000 of new money to cover the cost of the IPO.

Macromac is a telecoms business that specialises in mobile messaging. Its technology platform is used to deliver content to mobile phone users across Malaysia and Thailand. The business, founded in 2006, made a profit of around RM8m (£1.5m) last year and expects its domestic market to grow at rates of almost 7 per cent a year over the next five years.

Tighter telecoms regulation in Malaysia has prompted Macromac to push ahead with plans to expand into other Asian markets, beginning with Thailand, where smartphone penetration remains low and mobile phone users are therefore still heavily reliant on text messaging services.

Sun is setting for oil and gas investors

Disappointing returns from the oil and gas sector of the Alternative Investment Market have seen it fall from favour with investors in the junior sector according to new research published in Aim Journal.

While oil and gas company trades accounted for more than half of all share-dealing transactions on Aim in 2012, this year, the figure is down to a third.

The decline reflects the disappointing returns posted by companies in the sector over 2013, which have reflected a weak period for commodity prices. Mining stocks have also been less popular with investors.

Instead, technology stocks now account for a much more significant proportion of Aim transactions. More than 12 per cent of transactions on the market so far this year have been deals in the shares of technology companies, more than double the figures for 2012. 

Small businessman of the week: Steven Greenall, Founder, Warwick Music

We founded our business making plastic trombones in 2007 – we said right from the beginning that these would be serious musical instruments, not toys. Brass instruments are heavy and expensive and the trombone has been dying out. But a plastic trombone is light, robust and it’s easy for smaller hands to hold.

It took a while to get the product right but what we have now sounds exactly like a brass trombone and looks identical externally. We launched the product online in 2010 with a production run of 200 instruments and sold out in 12 minutes. After another run with the same results, we approached Steinway, which now acts as our worldwide distributor.

We’ve now sold 90,000 plastic trombones, which makes us the world’s largest producer of the instrument. In the UK, we sell to schools, to junior orchestras and to families, as well as to professional musicians.

The arrangement with Steinway works well for us because we wanted to be free to focus on design and innovation. We’re currently working on a plastic trumpet that we hope will be just as successful. The trombone has just won Innovation of the Year at the Nectar Business Awards which is fantastic.

Start your day with The Independent, sign up for daily news emails
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

They fled war in Syria...

...only to get stuck and sidetracked in Hungary
From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

Title sequences: From The Prisoner to Mad Men

Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

Giorgio Armani Beauty's foundations

Sumptuous fabrics meet luscious cosmetics for this elegant look
From stowaways to Operation Stack: Life in a transcontinental lorry cab

Life from the inside of a trucker's cab

From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

Kelis interview

The singer and sauce-maker on cooking for Pharrell
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea