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How Barclays Bank Charges are Killing Small Businesses and Startups


Barclays Business Customers Will Lose a Minimum of £549 million of revenue due to bank charges in 2024. Could these Charges be Killing Small Businesses and Startups?

As the rise of interest-related products for businesses in the United Kingdom continues to gain momentum, traditional banks like Barclays and others are being put under pressure. Under pressure to improve their service offerings to companies. And under pressure to give a return for the missing interest these companies can get elsewhere. Barclays is just one of these banks. However, after further investigation by our editorial team, we believe that Barclays is where small business and startups go to die. And this is why.

4.33% interest on a business account with Tide! 4.7% with Wise… Even Starling Bank offers 2.5% for business customers. Great news for businesses, not so great news for traditional banks. Or is it?

Our readers will recollect the story we shared about Tech Nation and the transfer of funding from this startup support entity to Barclays Eagle Labs.

The story also highlights a patchy history of working with startups at Barclays. So, having been gifted a world-class startup incubator and related funding of over £12 million of taxpayers’ money, one would imagine the bank has upped its game? As did we.

Has Barclays improved its offering to startups since Eagle Labs gained government funding?

You might have heard one of the radio adverts run by Barclays over the last few months enticing small and medium-sized businesses to switch to the bank. The adverts highlight the opportunities available for companies who gain access to Barclays Eagle Labs. It sounds really compelling.

But that’s not all. If one clicks on to the dedicated ‘business banking’ section of the banks website there are several enticing offers there too. ‘Meetings with investors’. ‘Business growth coaching programmes’ and much more.

So we called our Barclays business banking team. And asked them how to get this support.

The business banker first tried to sidestep the questions about additional support by suggesting we get a loan from the British Business Bank. The same one that provided the bounce back loan during the pandemic. An option that often comes with heavy tax repercussions for most companies and company directors.

The Barclays business banker was informed that this type of funding was not what our company needed. We wanted interest on our account. We wanted specialist support from industry experts. We wanted an overdraft. None of this was available. The only availability for immediate help was the British Business Bank funding. Something that appears to be an easy way for HMRC (the UK tax office) to gain some extra revenue.

Is this really all that has changed since Barclays ‘won’ the Tech Nation contract and related funding last year?

Do loyal Barclays customers deserve better?

If a business customer of Barclays has an average of £5,000 in their account throughout the year, then they would make at least £235 with Wise. Not only that, but they would also have saved the £100 annual fee. Then there is charges for foreign exchange payments where Barclays charge 2.75%. On $10,000 per year that is another £275 of charges. Gives you a total of £610.  

Data from a recent Barclays Business Barometer Barclays suggests that the bank has 595 small businesses that regularly interact with the bank. If each of these companies are on average losing £610 each in revenue due to charges, then as a group they lost £362,950. Not a colossal amount of money. But not quite what Barclays customers should be paying for their years of loyalty. Especially as Wise could save them this money… immediately.

If we take the 900,000 businesses listed on the Barclays site and try the same numbers with this amount, then the figure becomes a little more startling. A minimum of £549 million of revenue is being taken away from these businesses because Barclays is not able to adapt. Fintechs like Wise and Tide are not only able to provide a comfortable interest rate which helps your money work. They are also probably more inclined to want to help your business grow. Why? Because they understand the reality of growing a business today. Something that Barclays seems to have forgotten about.

We have reached out to Barclays to ask them to explain what they are doing for customers like us and the wider market. When they respond we will be certain to follow up on this story.

Author: Andy Samu

See Also:

Tech Nation Scrapped: What Is Next For Tech Entrepreneurs? | Disruption Banking

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