11 Business Banking Innovations to Know in 2021

Challenger banks have skyrocketed in popularity over the past few years as more and more people take their personal and business banking from traditional institutions to these younger, more customer-oriented companies. 

It makes sense – unlike traditional banks, these relative newcomers are fast-moving digital natives, offering lower fees for tailored services, streamlined web banking, and user-friendly mobile apps. Instead of going to a physical branch, you can move money between accounts, pay bills, send invoices, apply for loans, and more, from the comfort of your own phone.

Searches for challenger banks have increased by 32% between 2016-2019.  Unsurprisingly, the pandemic has seen a 40% spike in US customers turning to challenger banks with their flexible, digital-first approach. By early 2021, 11% of  all US customers were using a digital bank as their primary account. 

Traditional banks can find it difficult to change how they do things, slow to adapt to the evolving market. Challenger banks, meanwhile, are agile and innovative, shifting their services in response to customer needs. They often offer specialized support, targeting, for instance, the needs of freelancers, frequent travellers, or small business owners. 

What is a challenger bank?

Challenger banks are newer retail banks that compete directly with traditional big-bank institutions. Born out of the 2008 financial crisis and rising distrust with the established banking sector, these new companies tend to focus on tech-first innovations, and often cater to markets traditionally underserved by big banks. 

While some challenger banks have brick-and-mortar branches, most of their focus is on the digital sphere. This means advanced AI analytics and slick mobile apps that are reliable and easy to navigate. They do everything traditional banks do – checking and savings accounts for personal and business banking, credit cards, loans, insurance, etc. – and then some.

Why small business owners should consider a challenger bank

Opening a business account with a traditional bank can be a slow bureaucratic process, especially for small business owners. While challenger banks follow the same safety procedures – such as proof of identity – the turnaround is faster and just as secure. 

Traditional banks have historically overlooked small businesses, charging high fees while focusing their attentions on large corporations. There are a number of challenger banks such as NorthOne and Novo that specialize in small business banking.

Opening a business account with a challenger bank is a quick and easy process. You will get excellent customer support, with many companies offering no-hold calls, live chats, and fast email responses. 

Fees are much lower than traditional banks, with some even offering no minimum balance or monthly account fees. Via your phone, you get 24/7 access to your accounts, anywhere you go. Many business challenger banks offer useful features such as remote cheque deposit, multiple login services for multiple stakeholders and employees, subaccounts, and invoicing features.

Top Challenger bank features for business

1. Built-in accounting tools 

An app with streamlined accounting tools is a lifesaver for keeping tabs on your money. NorthOne manages your full account history, allowing you to check receipts anytime. When you make a purchase, it can automatically categorize it within seconds. The app also lets you connect to a POS or payment processor, pay invoices, send ACH or wire payments instantly.

2. Interest up to 1% on checking account holdings

Let your money make money! While traditional banks tend to offer lower interest on checking accounts (0.1-0.40%), you can find much more competitive rates in the challenger market. At 1% interest on a minimum $1000 balance, Bluevine takes the cake on this feature.

3. No minimum balance fees

With many bank accounts, if the checking account balance dips below a certain number, you’re charged a fee. Not your vibe? No worries. Novo, Lili, and Mercury all offer accounts with no minimum balance fees.

4. No monthly fee

Banks often charge between $6-$15 a month to maintain your checking account. That adds up! If you’re looking for a no-monthly-fee account, check out Novo, Bluevine, and Mercury. 

5. Sub accounts to manage money

Want to set aside money within your main account for tax season, payroll, or a rainy day? NorthOne offers “envelopes,” an easy way of designating funds under any label you like. You can automate these envelopes to budget your income for you, moving money between sub-accounts based on a percentage or a set dollar amount.

6. Invoice creation, sending, and tracking

Especially for contractors and freelancers, a built-in invoicing feature is invaluable to managing a small business. NorthOne offers both in-app invoicing and a free invoice app so you can draft, send, and track an unlimited amount of invoices.

7. Plugins with Quickbooks, Stripe, Shopify, and other business tools 

There’s a lot to keep track of when you’re running a small business, and the last thing you need is to spend hours manually inputting all your stats from one app to another. Why not get them to synchronize? NorthOne is known for its app integration capabilities, letting you link your account with Quickbooks, Expensify, Wave, Stripe Shopify, and more.

8. Fee Reimbursements for ATMs

Need to withdraw cash at an ATM, and get stuck with one of those pesky usage fees? Fortunately, an account with Novo means you’ll get that fee reimbursed automatically, across the United States.

9. Cashback up to 3% through debit card usage 

Need to withdraw cash while you’re making a store purchase? With a Lili debit card, you can get cash back up to three percent of your purchase, at participating vendors.

10.  Easy mobile check deposit

You don’t have to go to a physical bank to deposit your checks – just take a picture in your banking app, and let the tech do its thing. NorthOne offers a competitive mobile check feature, with up to $75k per check and no monthly limits.

11.  No or low fees for outgoing wires and cash deposits

Major banks can charge as much as $30 for an outgoing domestic wire, and depositing cash can also come with a hefty fee. If you’d like to avoid fees for wires altogether, Mercury might be your way to go. It offers fee-free wire payments up to $5000, and wire deposits of up to $5 million per day. Both NorthOne and Bluevine offer low-fee cash deposits through the Green Dot Network.

Conclusion

With a variety of challenger banks offering competitive, customer-oriented alternatives to traditional institutions, there are plenty of options for small business owners. Offering features such as built-in accounting tools, invoice management, and robust app integrations, there is something on the market to meet every need.