NEW research from fast-growing fintech company Allica Bank has revealed that small and medium sized businesses (SMEs) across Scotland are losing out on more than £370 million annually as a result of not shopping around for better interest rates on their business savings.
The analysis reveals that the ‘big six’ high street banks offer an average interest rate of 1.45% on small business savings, down from 1.59% earlier in the year. Beyond the big six however, rates of up to 4.33% available from challenger banks, a figure nearly three times higher than the big six.
For Edinburgh, its 17,760 SMEs could be making an additional £38,539,200 every single year if given better rates on their savings as offered by challenger banks.
For SMEs with an average £75,000 in savings, the discrepancy between big six interest rates and what’s available elsewhere is equivalent to £2,157 per year. With 170,650 SMEs across Scotland, this equates to a whopping loss of £368,092,050 for Scotland’s economy. For established SMEs with larger deposits of savings, the annual figure lost could be much higher.
The big banks are under-serving SME customers despite SMEs being the back-bone of the economy and supporting high-streets, job creation, investment and livelihoods across Scotland. Nationally, SMEs account for around 61% of all UK employment, and around a quarter of GDP.
The latest figures come off the back of research produced last year by Allica which revealed that SMEs are losing more than £7.5 billion per annum in ‘missing’ savings interest per year.
Commenting, Steven Smilie, Scotland Relationship Manager at Allica Bank, said:
“Scotland’s SME economy is Scotland’s real economy, accounting for 170,650 businesses. These businesses are the life and soul of communities across Scotland and the difference between boarded up shops and vibrant high-streets.
“Despite this, SMEs aren’t getting the returns they deserve from high-street banks with interest rates that are consistently lower than are offered to bigger businesses. This lost income could represent a significant boost to the Scottish economy and be put toward investment, employment and a better deal for employees.
“The high-street banks are taking SME customers for granted, and those customers should shop around and get the return on their savings that they deserve.”
