The banking industry is just like any other: it’s full of competitors, perennially seeking to remain competitive with one another in order to survive. This competition drives innovation and progress in the industry. In the case of banking, this innovation is manifesting in an increasing demand for a digital banking experience (specifically a mobile one) from millennial and Generation Zers. Moreover this growing desire to access financial services from digital channels has led to a surge in new banking technologies that reconceptualize the industry entirely. Adapting to these trends is important for banks to remain competitive, but vital for new or existing LLCs so as to streamline their business model.

A Statistical Overview

  • 45% of respondents to a study of banking customers identify mobile banking as a top three factor in determining their choice of institution
  • 80% of respondents used mobile banking as the primary way to access their account
  • Mobile banking growing at 5x the rate of online banking
  • 48% of banking executives believe that new technologies like blockchain and AI will have the greatest impact on banking through 2020

Latest Banking Trends

The influence of technology continues to launch banking into a digitalized future, and it’s vital for banks to adapt to these trends in order to cater to the market and survive. Those that have engaged with this have experienced exponential growth. For example, some retail banks are establishing their platforms in the Banking-as-a-Service (BaaS) space to remain competitive. BaaS is a key component to open banking in which banks open up their systems and allow third parties to access their data to improve their own services in real time. Starling, which used to be exclusively a ‘bank to customer’ (B2C) experience diversified its product and revenue streams after launching a BaaS system, not only helping it to remain competitive in the market, but easing the way for new ‘neobanks’ to enter the market.

Neobanks are redefining the future of banking around the world; these are types of direct banks that operate exclusively online without ‘brick and mortar’ premises. They have been rapidly growing in popularity in the UK, but with the recent loosening of regulations in the US all evidence points towards them taking a global leap given the size of the country. One reason these banks are so popular is because of their sophisticated mobile banking tools. Mobile banking has been solidified as a must-have feature for an institution to remain competitive, and the importance of this has only been exacerbated by COVID. The development of neobanks in the US will bring awareness to digital-only banking, and eventually wan-out traditional banking firms if they do not adapt. Incumbent financial institutions and tech companies can benefit from understanding exactly how leading neobanks are raising the bar for customer expectations

TRUiC’s Best Banks for Small Businesses

As illustrated above, the banking world is heading towards an increasingly digitized future. It is paramount that new and existing LLCs adapt their business around these new banking trends if they want to streamline it, though this isn’t the only consideration of theirs and it might still be better to opt for banks offering more traditional benefits depending on the business. Below are TRUiC’s rankings of the top 5 best banks for small businesses, and who each one is right for:

  • Navy Federal Credit Union is described as the best credit union business banking option, it provides members with higher interest rates and no monthly service fee.
  • BlueVine is described as the best online bank, it demands no fees yet offers unlimited monthly transactions. This is optimal for an online business operating 24/7 as they can bank without unexpected fees.
  • Chase Bank is described as the best ‘brick and mortar’ bank, it has conveniently located branches, variable fees and tailored checking options, making it perfect for a small business that operates with a lot of cash (such as a restaurant)
  • Wells Fargo is described as the best bank for businesses that require an SBA 7(a) loan as they are experts in the matter
  • US Bank are said to offer the best no-fee business checking account, which makes them helpful for businesses that only have a few monthly transactions but need a large regional bank

Closing Remarks

BlueVine was the overall recommendation of TRUiC, which is testament to growing eminence of neobanks and the effect this will have on how LLCs do business. Moreover, BlueVine offers many benefits as a result of being online-only (e.g. no fees, unlimited transactions etc) but the fact that there are no branches render cash deposits expensive, which will be something businesses must take into consideration if this is the direction banking is taking. An increasingly digitized banking world could likely mean businesses taking advantage of such banks must move away from using cash in favor of cards.

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