Six Tips For StartUp and SMEs Founders To Picking The Right Bank
You need to fact-find before deciding where to park your company’s money. choosing which bank to work with is quite a hustle considering the many bank accounts available these days: There are free hence integrated with VISA, Mastercard, or mobile money.
In the end, all we need is a safe place to keep our money!
I am frequently asked these questions …..We are about to open up a bank account, which bank would you recommend? Should we go for local banks or international banks? Which Bank has good service and experience in our industry? Which Bank does your company bank with? I hope this read is going to answer most of founders who aspire to bank smartly and properly hence avoiding the trouble of opening multiple bank accounts,
Here are my few cents on the subject:
- Nature of business, is it a product or service? if it’s a product (Mimosa Concierge) you need to look at the revenue model, how does your customer pay you, does it require high-end technology and security features to enable the transaction to be successful? if yes then opt for a bank invested heavily in high tech and security. If it's a service-based business then invest heavily in packages, features, and functionalities.
2. Bank Size and Business Size, for small business its good to opt for small banks because they are in tune with the local market (i.e Equity Bank Tanzania) due to their flexibility, they are capable to build a solid relationship with your business thus ultimately helping you if you run into problems. Smaller banks can make decisions at the branch level, which can be much quicker compared to big banks where decisions are made at a higher level.
Again If your business growth will surpass the growth of the bank, then you better go for big banks directly. This reminds me of the case of Aliko Dangote’s loan issue, where all big banks in Nigeria teamed-up to give him a loan. Therefore, you don't need to go for a bank that has limited facilitation in near future.
Big banks (i.e NMB Bank or Standard Chartered) assure a bunch of services and you can find their branches everywhere throughout the country and your money is safe, you don’t worry about bankruptcy and you are assured that the bank can survive even in an economic crisis.
3. Bank services and Automation for instance in Tanzania many banks are fully automated mobile apps and connected to mobile money that offer services at anyplace with your convenience to access your business bank account and do transactions. My personal experience with Stanbic Tanzania, CBA Tanzania has been good. The banks are doing quite well with construction companies (Construction Loans). For SMEs, you can look to CRDB Bank who provide SME Bidii loan customized product for your business. Consider also, other crucial services that will benefit your business like, overdraft, Loan interest rate, and etc.
4.Bank Charges and Fees, Banks charge monthly fees, others charge maintenance fees for a business checking account while others don't. Some banks waive these fees with a certain agreement e.g. when you reach a certain amount they waive those charges, so you’re advised to look at those kinds of benefits and the cost of maintaining an account. A particular bank if you find is very expensive simply your not their niche, just look for another Bank.
5. Innovation and Flexibility, Go for the agile bank which is more innovative and flexible to accommodate your business even if they don’t provide a specific service of your need. As long as they are more than ready to build new features just to serve your business need. However, banks always explore if your business will attract more transactions. I like EXIM Bank Tanzania they say “Innovation Is Life”
6. Sectoral Bank Basis. Many banks out there are sector-specific, what I like about these kinds of banks, is they provide beyond just banking services as they understand the industry, you both speak the same language i.e. TIB Development Bank with emphasis on industrialization of the country, While TADB Bank has invested heavily in the agriculture economy. If your business is along that line. such banks could be your best option. Note that religious banks are also there. If your business is affiliated with a religion, you can definitely opt for that, however, be kin with the opportunity cost.
There many more reasons you can consider. Bottom line is, business banks have diverse areas of focus. It’s worth your time to deeply understand their gaps and ensuring that your requirements are met before opening a business account. Fostering and having a solid relationship with your banker is a health investment for your business!
To the founders within and beyond Silicon Dar, you can learn more from Silicon Valley Bank and attract inventors looking to invest in the banking industry. That is the direction of this digital age.
