Business account: Fintech or traditional bank?
Anyone founding a business cannot avoid the business account. Startups are spoilt for choice, from the traditional branch bank to a Fintech, which is still in the startup phase itself. However, a pretty design and good usability should not be the main criteria for deciding on the right business account. We reveal which questions are really important.
Which criteria are important when searching for the right business account?
Traditional high street banks have been doing something right for over 100 years. Who knows whether the two-year-old Fintech will still be around in three years’ time? The “new” ones on the banking horizon often lack the benefit of the doubt, yet some of them are very successful. Depending on what you as the customer expect from a bank, a Fintech can also offer you advantages over a traditional high street bank.
When choosing a provider, there are three essential criteria that directly limit the choice of bank accounts:
Financing & growth: What do you expect from an account provider? Would you like a traditional relationship with your bank that enables you, for example, long-term corporate financing with or without subsidies, do you need a current account overdraft or are you dealing with foreign currency? This is not possible with Fintechs and some direct banks; in this case the traditional branch bank must be chosen.
Cash: Even if the use of cash is slowly decreasing – if you’re starting up in the catering trade, for example, you will not be able to avoid making regular deposits into your business account. These deposits to your bank account are often not possible or very expensive with direct banks or Fintechs compared to the traditional branch banks. But you should also look closely when it comes to withdrawals, as these may also come with fees. On the other hand, if you need the account primarily to process online payments, you will find cheaper alternatives with Fintechs.
Compatibility with the legal form: Not all providers cover the most common legal forms with their accounts. The dividing line usually runs between freelancers and small traders on the one hand and limited liability companies on the other. Often neither direct banks nor Fintechs offer a business account for common German forms of organisation, such as GbR, UG or GmbH. Examples are Kontist, N26, Netbank or Targobank.
How much does a business account cost you?
This question cannot be answered across the board, because a business account does not usually have a set price, because it comprises several factors. For example, you may have to pay extra for every bank transfer, standing order, cash deposit or cash withdrawal. In addition, there is an almost infinitely large selection of offers from banks on the market – laymen quickly lose track. In principle, however, it can be said that the fees for a business account vary from free of charge to over 100 euros per month, depending on the bank and the scope of services. In general, Fintechs and direct banks offer more favourable conditions for accounts which are mostly used for the simple processing of online payment transactions.
Is the provider suitable for my legal form?
Providers of business accounts can be roughly divided into three categories: traditional branch banks such as Commerzbank, direct or online banks such as ING-DiBa or Fidor Bank, and Fintechs. Fintechs either have their own banking licence or work with a bank in the background. However, not every provider allows accounts to be opened for the most common legal forms.
For example, although N26, as a Fintech, offers a free business account, the account is reserved for individuals and freelancers only. And as soon as one deposit is made, the fee waiver is lost. At nine euros per year, Fidor Bank only slightly misses the zero mark. However, deposits are not even possible in this case. As a traditional high street bank, Commerzbank charges fees but is suitable for all legal forms.
How quickly can I open an account?
In Germany, it takes a few days, if not weeks, to completely establish your own company – especially for limited liability companies. In addition to waiting times for an appointment with a notary and possibly longer processing times for the commercial register, the time it takes to open a business account should not be overlooked. Here the Fintechs clearly take centre stage, as most of them offer streamlined online account opening within a few minutes. For an account to be fully opened online, however, identification via Video-Ident must be possible. Not many banks offer this procedure yet. Instead, a PDF is often generated after the online application form has been filled in, which must then be sent to the bank via Post-Ident. This means that it will take a few more days before your business account is opened.
Open a second account in addition to the first one?
After you have opened your first business account, you can also open another bank account for your company. Here the advantages of a traditional high street bank can be combined with the favourable offers from Fintechs. Contacts with several banks are recommended, especially for growing companies.
You can’t manage without an account
Of course, every business founder is looking for the best account. But one thing can be said for sure: there is no such thing as the perfect business account. Each account offers individual advantages and it is important to choose the offer that best suits your needs. In any case, only looking at the price should not be the main criterion by which you make your choice.