Business banking is an essential factor that can influence the smooth operations of a business. The choice of a business banking partner is critical and in the UK, two of the main contenders are Lloyds vs Starling Bank. This article aims to compare both banks on various facets of their service offerings to provide an insight into their suitability for business banking.
Lloyds vs Starling
| Feature | Lloyds Bank | Starling Bank |
|---|---|---|
| Online banking | Comprehensive online banking service available | Advanced online banking platform focused on ease of use |
| Mobile banking | Robust mobile app available on iOS and Android | Award-winning mobile banking app available on iOS and Android |
| 24/7 customer service | 24/7 phone and online customer service | 24/7 in-app chat support |
| Free business banking period | 12 months free business banking for new businesses | Free banking indefinitely |
| Overdraft facility | Overdraft facility subject to approval | Overdraft available based on credit check |
| Business loans | Variety of business loans available, subject to approval | Loans up to £250k, subject to approval |
| Business credit card | Range of credit card options available | Not available |
| International payments | International payments available with currency exchange | International payments supported in 38 currencies |
| Invoice financing | Available, helps businesses improve cash flow | Not available |
| Cash deposits at Post Office | Deposits at any Post Office branch | Deposits at Post Office branches for a small fee |
| Cash withdrawals at Post Office | Withdrawals at any Post Office branch | Not available |
| Business savings account | Various savings account options available | Single easy-access savings account option |
| Direct Debits | Direct Debits supported | Direct Debits supported |
| Standing Orders | Standing Orders supported | Standing Orders supported |
| Multiple account holders | Multiple account holders allowed | Multiple account holders allowed |
| Cheque book option | Cheque book available on request | Not available |
| Account Switch Service | Part of Current Account Switch Service | Part of Current Account Switch Service |
| FSCS Protection | Protected up to £85,000 | Protected up to £85,000 |
| Branch banking | Nationwide branch network | Not available, online only |
| Real-time notifications | Not available | Real-time notifications for all account activity |
| Integration with accounting software | Integrates with most popular accounting software | Integrates with a wide range of accounting software |
| Business insights and advice | Business insights offered via online resources and in-branch | Business insights offered via app |
| Business debit card | Business debit card issued | Business debit card issued |
| Mobile cheque deposits | Mobile cheque deposits via app | Mobile cheque deposits via app |
| Cashback rewards program | Available on certain business cards | Not available |
| Tailored business support | Available via branches and online | Available via in-app chat and online resources |
| Payment scheduling | Payment scheduling available | Payment scheduling available |
| Support for international businesses | Support and products available for businesses operating internationally | Primarily focused on UK businesses |
| Currency exchange service | Available with competitive rates | Available via the app, rates are real-time and transparent |
Lloyds Bank
Lloyds Bank is one of the “big four” banks in the UK and offers a comprehensive range of services. With its extensive history and nationwide branch network, it provides traditional banking solutions to businesses of all sizes.
Pros and cons
Pros
- Nationwide branch network: Unlike digital-only banks, Lloyds Bank has physical branches throughout the UK, making it easier for businesses who prefer face-to-face banking.
- Comprehensive product range: Lloyds offers a full suite of financial products, from business loans and overdrafts to credit cards and invoice financing.
- Longstanding reputation: As one of the UK’s oldest banks, Lloyds Bank has a strong reputation and well-established banking infrastructure.
- 12 months free banking: Lloyds Bank offers a free business banking period of 12 months for new businesses.
Cons
- Charges after the free banking period: After the 12-month free period, businesses are charged for banking services.
- Traditional banking model: The bank’s traditional banking model may not be as fast or efficient as digital-only counterparts.
- No real-time notifications: Unlike digital-only banks, Lloyds does not provide real-time notifications for transactions.
Fees and charges
| Service | Lloyds Bank Charges |
|---|---|
| Monthly account fee | £6.50 after 12-month free period |
| Electronic payments (in or out) | £0.35 |
| Cheque or cash payments (in or out) | £0.65 |
| Branch cash payment (in or out) | 0.90% of the cash value |
| Unplanned overdraft | £15 plus interest |
Unique and standout features
Lloyds Bank’s comprehensive product range, extensive branch network, and in-depth industry expertise stand out among business banking providers.
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Their extensive product range includes invoice financing and business credit cards, which are not offered by all banks.
Additionally, Lloyds Bank offers face-to-face banking and consultation services across their UK branches, giving businesses the opportunity to discuss their needs and requirements in person.
Starling Bank
Starling Bank, a digital-only challenger bank, provides 24/7 mobile business banking services. It aims to streamline the banking experience with features such as real-time notifications and no monthly fees.
Pros and cons
Pros
- No monthly fees: Starling Bank doesn’t charge monthly account fees, making it more cost-effective for small businesses.
- 24/7 mobile banking: Allows businesses to bank whenever and wherever they want.
- Real-time notifications: Instant updates on account activity, helping businesses stay on top of their finances.
- FSCS protection: Like Lloyds, Starling Bank offers protection on deposits up to £85,000 through the Financial Services Compensation Scheme.
Cons
- No physical branches: Businesses preferring face-to-face interactions may not find Starling suitable.
- Limited services: Lacks some services like business credit cards and invoice financing.
- Cash withdrawal limitations: Cash can’t be withdrawn at Post Offices, unlike Lloyds Bank.
Fees and charges
| Service | Starling Bank Charges |
|---|---|
| Monthly account fee | £0 |
| Electronic payments (in or out) | £0 |
| Cheque deposits | £0 |
| Cash deposit at Post Office | 0.3% of the cash value |
| Unplanned overdraft | 15% EAR |
Unique and standout features
Starling Bank’s real-time notifications, 24/7 mobile banking, and free electronic payments make it a standout choice for businesses seeking a digital banking solution.
Its fee-free structure for regular transactions provides a cost-effective option for startups and small businesses.
Additionally, the bank offers a marketplace that integrates with a range of business tools and services, allowing users to connect their bank account with accounting software, invoicing tools, and more.
Conclusion – Lloyds vs Starling
Both Lloyds Bank and Starling Bank provide compelling business banking services.
The choice between the two depends largely on your business’s unique needs.
If you prefer traditional banking with a wide range of services and face-to-face interactions, Lloyds Bank may be more suitable.
Conversely, if you seek a modern, digital, and cost-effective solution with real-time updates, Starling Bank may be the preferred option.
Remember, the ideal bank for your business will align with your operational preferences, business model, and financial requirements.
FAQ
Yes, both banks are part of the Current Account Switch Service, which guarantees a smooth transition within seven working days.
Both banks offer protection through the Financial Services Compensation Scheme (FSCS), insuring deposits up to £85,000.
Yes, both banks allow cash deposits. Lloyds Bank permits deposits at their branches and Post Offices, while Starling Bank allows deposits at Post Offices.
Yes, both Lloyds Bank and Starling Bank provide business overdraft facilities, subject to approval.
Yes, both banks offer business loans. However, approval depends on your business’s financial condition and credit history.
Yes, both banks allow the setting up of direct debits and standing orders.