Last week we looked at two of the newest challenger banks and how they compare to the traditional high street options - did you have a read? If not, make yourself familiar with the perks of using Starling Bank and Tide, and why we think the challenger options may be starting to be the natural choice for business owners in the UK over the high street. 
This week we're looking at two more of the most popular challenger banks, Coconut and Revolut, and we'll finally be giving our thoughts on whether we are convinced by this technological, forward-thinking takeover of the banking industry or whether it's best to stay traditional and stick to the high street. 

So, let's get started! 

Coconut 
Coconut is a banking and accounting product all rolled into one, making it ideal for both limited company directors and sole traders. 
 
The central value proposition of Coconut is to make it easy for customers to see how much tax they owe - something that you don’t get with major high street banks. The app automatically calculates your tax burden during the current tax year, based on your income, expenses and exemptions. It helps you to avoid an unexpected bill from HMRC. 
 
Coconut also offers an incredibly useful feature - “expenses that do themselves.” The app provides directors with a way to organise and categorise their expenses and issues notifications to remind customers to snap their receipt for tax purposes. The idea is to keep everything in one place and ensure that business owners are bulletproof against any HMRC tax audit. 
Knowing what you can claim for as an expense is a challenge, but again, Coconut tries to make it easy. The app gives you detailed information about what counts as an expense, and what doesn’t, ensuring that you don’t fall foul of the tax code. Invoicing is a breeze too. The Coconut app tells you when you get paid, how much and by whom. It’ll also categorise payments as “income” or “gift” and tell you whether you should apply VAT or not. Very handy! 
 
Coconut currently offers small businesses and freelancers two levels of accounts called “Start” and “Grow.” Start is free and provides expense tracking, the ability to issue three invoices per month, and charges 2% on purchases abroad. The Grow option costs £5 per month, and in return, you get free foreign currency exchange, unlimited invoices and free card replacements if you lose yours. 
 
Revolut 
Revolut, as the name suggestions, wants to revolutionise how business customers do banking. Revolut is slightly different from the challenger bank products we’ve discussed so far because it is targeting larger businesses i.e. those with revenues over £150,000 per year. 
 
The company offers all of the usual invoicing and expenses capabilities, but it also provides businesses with a platform where multiple people can interact with the company’s financial position and carry out transactions. Revolut, for instance, is an international platform. Business customers can send money across an unlimited number of accounts in 28 currencies. Administrators can also set permissions, controlling who can view statements and make changes. There’s also an option to integrate Revolut with popular business software, harmonising both finances and accounting into a single, usable product. 
 
Perhaps the most exciting feature of the Revolut business account is the perks that it offers - stuff that its business customers are likely to use. For instance, signing up to Revolut business banking gives you access to Google Ads credit of up to £120 - great for your digital marketing campaign. It also provides up to £150 off Expensify subscriptions, 10% off Apple products, and up to £100 off Pipedrive CRM tools, making managing customers cheaper. The perks alone offer companies substantial savings over the long term if they choose to use them and utilise them correctly. 

So, challenger vs. high street: which is best? 

The challenger banks experienced dramatic success over the past couple of years, stealing substantial market share from the incumbent high street banks. Watching their popularity grow among the business community has been nothing short of remarkable. But there's a good reason for it - we think that their products are better in many ways. 
 
It’s now clear to the high street that if they want to compete against the challengers, they need to upgrade their services. And to an extent, this is what they’ve been doing. Many have added functionality to their apps and upgraded the perks associated with their accounts. 
 
Unfortunately, it’s all too little, too late and the problem is one of trust. If high street banks could offer businesses all these services in the past, why didn’t they? Why did it take the emergence of new brands on the outside to change how the leading players in the market work? 

Need help deciding? 

The amount of choice available to business customers today is vast. We’ve only discussed a small fraction of all the challenger banks out there offering low-cost banking services to business customers. The benefits, however, are clear: more transparency, easier accounting, and more data at customer's fingertips. 
 
If you're convinced that you want to open a business bank account with one of the challenger banks - or perhaps you're still feeling a bit confused and overwhelmed - we would love to help. Why not give us a call or send an email
 
 
 
 
 
Written by: 
 
Nicola J Sorrell - 
Effective Accounting 
 
Founder | Xero Champion | IR35 Expert 
Share this post:
Our site uses cookies. For more information, see our cookie policy. Accept cookies and close
Reject cookies Manage settings