The gap in business savings rates offered by challenger banks vs those offered by big banks remains at nearly 3%. When banking with an incumbent, SMEs with an average balance of £75,000 are losing out on approximately £172 a month in extra savings interest.
Over a year, this equates to more than £2,000 of missing interest per SME. Average interest rates from big banks have remained unchanged for nine months. Meantime, challenger banks continue to prioritise offering strong rates to SMEs.
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An independent tracker, published by Allica Bank, estimates that UK high-street banks withheld more than £200m in savings interest last month from SMEs.
The average SME in the UK has around £75,000 of business savings. Allica Bank says SMEs are offered less than 1.6% interest on average on this balance by the big banks.
Meanwhile, the best challenger bank rate has held steady at 4.33%. That represents a difference of almost 3%, the equivalent of £172 a month in additional savings for individual SMEs.
Allica SME monthly savings tracker
Allica says that the gap in savings rates offered by big banks and challengers means that last month alone big banks withheld around £208m of savings interest from British SMEs. This figure does not take into account the balances that SMEs maintain on current accounts, earning no interest.
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By GlobalDataAllica’s new SME Monthly Savings Tracker monitors the average savings rates offered by big banks. These are compared to the savings interest rates offered by challenger banks for comparable SME savings products.
It has shown a continued and significant gap between the rates offered by challenger banks and their larger, incumbent competition.
This data underpins the bank’s previous research. This found that SMEs are due more than £7.5 billion in ‘missing’ savings interest per year.
This growing discrepancy in the rates offered is occurring despite the Bank of England Base Rate remaining steady at 5.25% for 10 months.
SMEs are being ‘ripped off’
Richard Davies, CEO of Allica Bank, said: “SMEs across the country are getting ripped off when it comes to their business savings. By tracking the rates that major banks offer to their small business customers it shows that nothing is changing.
The Bank of England Base Rate has consistently sat at over 5% for almost a year now. This means there is no excuse for banks not to be passing on better savings rates to their SME customers.
“Seeing the continued stagnation of the rates offered to SMEs just confirms to me that they don’t value their small business customers. It’s an incredibly tricky time to be a business owner in the UK and every penny counts.”
