British businesses are still struggling to earn a decent return on their hard-earned cash, despite signs of the interest rate environment becoming more favourable to savers, according to a survey of 615 senior subject-matter expert (SME) managers carried out by YouGov.
Commissioned by London fintech service Flagstone, an online cash deposit platform, the survey found that widespread inertia meant more then 50% of SME’s earned less than 0.1% on bank deposits – far below the 1.2% return offered by market leading UK banks.
This is despite the fact that a third of all SME’s hold all of their cash reserves in their current account with an estimated 104bn spread across 5.5m SME business current accounts.
Tom Senior, commercial director of savings at Cambridge and Counties Bank, said: "We recognise that many UK SMEs are receiving low rates on their cash deposits and that this can be because opening multiple accounts is too time consuming for them. That is why we offer our products through the Flagstone platform which enables SMEs to earn up to 1.70% Gross/AER on our three-year bond.
“Flagstone deliver a way for clients to access not just our best product, but those of other banks to enable customers to open multiple cash deposit accounts with a single application and really make the most of their savings.”
A key barrier to action is the perceived hassle of changing bank, with 40% of SME’s believing it was too much bother to switch, while 14% claimed not to care about the level of interest on offer and two-thirds worried about the risk of using a non-High Street bank.
The banking industry has been shaken up in recent years by the arrival of smaller, leaner challenger banks.