New SME Savings Tracker reveals massive and persistent gap in savings rates offered to SMEs
A new savings tracker, published today by SME-focussed Allica Bank, has shown a continued significant gap between the rates SMEs are offered by challenger banks and their larger, incumbent competition.
Allica’s innovative new SME Monthly Savings Tracker provides an up to date analysis of the average savings rates offered by the big banks, relative to the savings interest rates offered by challenger banks for comparable SME savings products. It underpins the bank’s previous research, which found that SMEs are due more than £7.5bn in ‘missing’ savings interest per year, with big banks offering zero or low interest rates.
Published today for the first time, the tracker reveals a notable increase in the gap between rates offered by big banks and challenger banks, with the best challenger bank savings rate reaching 4.33% compared to the average across all big banks at 1.59% – creating a savings interest gap of 2.74%, 0.32 percentage points higher than in February 2024.
This is the largest gap observed in the past year, with a notable 13.2% increase since last month.
The gap in savings rates translates into a real world savings penalty for SMEs keeping their hard-earned deposits in low-interest accounts – the annual SME savings penalty based on March figures has now risen to £2,058 – the first time in the past year the penalty has risen above £2,000.
Richard Davies, CEO of Allica Bank said: “Allica is determined to get a better deal for the country’s hard-working SMEs, which are being severely short-changed by a broken savings market.
“It makes no sense to see such a big gap between the rates offered by challenger banks and the large high street banks – and to see that gap jump by 13% in the last month alone shows how out of touch many of the banks are with SMEs and the pressures they face from the cost of business crisis.
“It’s high time we saw action taken to make the big banks pass on more savings interest to their SME customers. As it stands, SMEs are losing thousands of pounds leaving their savings languishing in low interest accounts with the big banks.”
The research tracks the top rates offered every month by the challengers banks and contrasts it against those rates offered by the leading six incumbent banks in the UK – Barclays, HSBC, Lloyds, Nationwide, NatWest and Santander.
Allica Bank has long been calling on the wider banking industry to give small businesses a better deal on their savings, allowing this money to be pumped back into local economies. The firm recently wrote to the Treasury Select Committee (TSC) asking MPs to investigate the lack of transparency in the business savings market and has since launched a campaign – The Great British Savings Squeeze – to tackle the issue, which has seen support from the FSB, IoD and other leading industry bodies. It is calling for people to sign its petition.
Allica is the UK’s only full-service bank solely focussed on established SMEs. It is the UK’s fastest-growing company over the past three years and is the UK’s fastest growing fintech ever.
