Have we finally found an ethical yet modern business bank?

Over nine months ago, I wrote about our long search for an ethical business bank that can also deliver the services expected of a modern bank.

Last time I wrote about this, we had reluctantly decided to stay with the Co-operative Bank, despite numerous ongoing frustrations with their service and the fact that they are no longer a co-operative. We worked around some of the practical issues by setting up a business account with Revolut. However, Revolut came with its own issues in terms of their ethics and a weird issue that many vendors don’t accept their Mastercard debit cards.

But this is changing. After a couple of years of trying to move away from the Co-operative Bank, I’m pleased to we’ve finally done it!

Our recent move away from the Co-operative Bank happened rather suddenly. Our accountant emailed us to say that new EU regulations on bank feeds were coming into force in mid-March, and that the Co-operative Bank was one of the few banks that had not upgraded its systems in time, nor given a timeline for doing so. This meant that if we remained with the Co-operative Bank, the connection between our bank account and Xero would stop working. The existing bank connections was already pretty basic, but losing the bank feed completely would have been a real hassle for both ourselves and our accountants.

We needed a bank that complied with the new EU regulations, and we needed it fast.

When I wrote the previous article, we were not satisfied with any of the options available, but then our friend Barry O’Kane of Happy Porch recommended that we look at Starling Bank.

I was impressed that Starling had one of the most comprehensive and clear ethical policies of any bank that I had seen. They seemed to have a solid service offering, a modern user interface and unlike Revolut, they had a UK banking licence. While Revolut’s EU banking licence technically works, we never felt comfortable using them for our main bank, especially now that the UK has left the EU.

I was surprised just how painless it was to open a new account with Starling. Having been made to jump through flaming hoops of bureaucracy with the Co-op on a regular basis, this was a breathe of fresh air.

Once we opened the account, we made the request to Starling to transfer our account from the Co-op under the current account switch guarantee, under which they moved our balance, our direct debits, standing orders and details of payments, and perhaps most importantly set up a permanent redirect on funds from our old Co-op account to the Starling account.

Overall, the process of switching banks was so easy that we wondered why we didn’t do it sooner.

So far, so good. The app based interface is easy to use and very easy to access on the phone with a fingerprint. I now feel more in control of our finances than I ever did with the Co-op, simply because I have so much more visibility of funds and payments on a daily basis.

It is only one month since the transfer, but it’s so far been a very positive experience and it finally feels like we’re in the 21st Century.

It isn’t perfect though. Although Starling seems to deliver all of its services to a high standard, the current service offering is limited and there are some things that we miss as follows:

With the Co-op, we had set up a service user for our accountants payroll team, enabling them to initiate salary payments to staff on our behalf. Starling don’t yet have this feature, meaning that we must do this every month. This can be an issue if salaries need paying when Vineeta and I are not available.

The second limitation is that Starling currently only issue Debit Cards to company directors. This means that other team members who have need to make payments will continue to use our Revolut account for now.

Debit cards are not the only reason that we need to keep our Revolut bank account. Starling cannot accept payments in US dollars, which is a problem for our US clients. We aways want to make things easy for our clients, so its important that we can accept payments in USD and not expect them to go through the hassle of trying to make payments from their US banks in GBP. Our USD Revolut account is therefore in place as a workaround.

The B Impact Assessment has various criteria for business banks, with points being awarded based on their status from an ethical point of view. The Co-operative Bank used to fit into this list as a co-operative, but they lost this status a few years ago. Although, Starling have a very strong ethical policy, their legal status as a private bank purely for financial profit means that they don’t fit any of the B Corp criteria. That’s a shame, but there’s not much we can do about it.

It’s 2020 and we still haven’t found a perfect bank that combines strong ethics with modern and comprehensive business banking services.

However, Starling feels like a big step forwards from in terms of user experience, and as they are a new bank with a start-up mentality, we hope that their offering will evolve quickly to fill some of the gaps that we’ve so far experienced.