What do pub owners need to know about ‘challenger’ banks?

Neon-coloured ‘challenger bank’ cards are becoming an increasingly common sight at pubs and bars up and down the country. 

Mobile-first banking services like Monzo, Revolut and Monese offer account holders unprecedented transparency over their savings in the form of real-time charts and infographics telling them how, where and when they’ve spent their monthly budget. 

The flashy bank cards and mobile apps are proving popular. In September 2018, challenger bank Monzo, founded in 2015, claimed 20,000 people sign up for its services every week – 15% of all new current accounts in the UK – with the company having processed more than £4bn worth of spending since its inception.

With these new services offering business accounts, The Morning Advertiser ​spoke to Ambreen Khasru, head of business banking at Monese to discuss what benefits they can offer pub and hospitality business owners. ​

How would you define the term ‘challenger bank’?​

“‘Challengers are financial services companies that are competing against traditional, incumbent banks and banking services. They are tackling some of the most complex problems within traditional financial services, while often improving financial inclusion and access. 

“Typically, challengers have developed a fairly sophisticated and easy-to-use mobile app paired with a debit card, making it very simple and easy for customers to open an account and move funds around. 

“Monese allows mobile people and businesses to bank like a local across the UK and Europe by opening a mobile-only dual UK and European current account in just minutes with a photo ID and a video selfie. Our accounts are portable across 31 countries, and both the app and our customer services are available in 12 languages. Some 70% of our incoming funds are salary payments and that tells us we are meeting a real need.”  

How are challenger banks taking on traditional high street banks?​

“Challengers are offering convenience with competitive and transparent pricing, for both personal and business banking. We offer services all in one place that the traditional high street banks are not, such as access to a range of currencies at competitive prices, multiple international bank account numbers, budgeting tools, access to third-party services, simple and intuitive customer experiences and great customer service.” 

How do challenger bank business accounts differ from more traditional banks?​

“The advantages of challengers include the quick set-up of an account, which can almost be instantaneous. All incoming and outgoing transactions are notified in real-time, and they offer spending analysis and budgeting tools. Challengers offer much better exchange rates than traditional high street banks and can seamlessly connect into bookkeeping and accounting software, making life much easier for businesses. 

“In the UK, SMEs have been hugely under-served by traditional banks. Opening a business account can be a notoriously time-consuming and complicated process, the set-up can take days, if not weeks. Traditional banks have limited digital online functionality and their exchange rates are often very high, with additional charges for transferring money abroad. All of this often acts as a deterrent for young companies looking to start out on their entrepreneurial journey.” 

For pub or hospitality business owners, what unique benefits can challenger banks offer?​

“Easy account opening, that’s very fast and an understanding of what hospitality business owners need to efficiently run their businesses. We know that life moves fast for entrepreneurs and, if they’re running a pub or a hospitality business, they often don’t have the time to keep on top of an online business account application, neither can they make themselves available to head back and forth to a bank branch. These types of businesses need fast, mobile-connected and transparent banking.” 

Can challenger bank business accounts ultimately save/make business owners more money?​

“Yes. The fees are lower and more transparent than those of a traditional high street bank, therefore, over the course of a year, a business customer can save in both bank fees and transfer fees. Often challengers offer low, invariable monthly fees, for a range of services, which are easier to manage and more transparent.”  

Can challenger banks help business owners with new digital tax returns in the UK? If so, how?​

“Yes. Making Tax Digital (MTD) for VAT makes it mandatory for VAT-registered businesses above the £85,000 threshold to keep records and submit VAT returns digitally using compatible software. Business customers must first sign up with MTD for VAT. We are working on enabling this so we will be able to help businesses access this service via our app.”