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Published 07 April 2021

Why choose an online business bank account?

Online business bank accounts are inexpensive, convenient and easy to use. While they can differ from more traditional options, online accounts may offer extra services or functions that you won’t find at the typical high street bank.

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Whether you’re a business owner looking for your first business bank account, or just considering a new one, you’ll likely have seen some of the newer banks offering 100% online customer experiences.

Some offer consumer and business accounts, while others are completely focused on business bank accounts. Either way, you’ll probably have some questions about what an online business bank account offers, how they differ from traditional banks, and what the pros and cons are.

What is an online business bank account?

You might be wondering what the big deal is especially if your current bank offers online business accounts. Online-only business bank account providers are fully online, meaning there are no high street branches and you can open and run the account fully from wherever you are.

These banks are sometimes called “challenger banks” as they have been set up to operate differently from traditional banks, challenging them on aspects like customer service, ease of use, and access.

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How else does an online bank differ from a traditional bank?

Aside from having no physical presence, online banks typically focus on streamlining the experience for customers, so often you can open accounts very quickly or even on the same day. Paperwork is likely to be digital too, with forms and statements all completed and stored online.

Because there are no physical branches, online banks can be competitively priced and work hard to offer good customer service with 24/7 helplines and support.

Are online business bank accounts safe?

The Financial Services Compensation Scheme (FSCS), which insures deposits in case a bank fails, also covers small businesses, limited companies and charities using online business bank accounts for up to £85,000. Look for the FSCS logo to make sure the bank you’re using is signed up to the FSCS scheme. Not all banks operating in the UK will be signed up, especially those headquartered elsewhere.

But when we’re talking about online banking, there’s another kind of safety to consider, and that’s your own online security. This means ensuring that your passwords are complex and unique, that you don’t use public Wi-Fi networks to access sensitive data, that you log out when using a shared computer, and that you keep your anti-virus software up-to-date. However, these are the same precautions you should take when using any online banking facility, whether a traditional or online bank.

What features will my online business bank account offer?

Online business banks may offer extra services or functions that a traditional bank might not. For example, they may offer an invoicing function ‒ some with the ability to customise the look of invoices and to automate chasing invoice payment ‒ receipt storage, mobile cheque deposits, and accountancy software plugins. Some even offer the ability to grant user access to your accountant to smooth your path at tax time.

Many offer the ability to open sub-accounts, making it easy to earmark funds for specific purposes, like tax, a project, to cover holiday leave, and so on. Additionally, some will offer perks like special offers and partnerships, cheaper international transfers, or accounts in other currencies.

Do online business banks charge fees?

Online business banks typically charge fees, although not always. An online account may have a set monthly fee, or you may be charged per transaction. Equally, it could be a free business account.

» MORE: Business bank account charges

What are the pros and cons of an online business bank account?


  • Easy and quick to open.
  • Enhanced features that many traditional banks don’t offer.
  • They can be cheap to run ‒ some offer low or no monthly fees.
  • Many offer 24/7 customer support.


  • Newer banks may only offer a limited range of services, for example, you may not be able to get a business loan or credit card.
  • Sometimes, speaking to someone face-to-face is preferable.
  • If your device is lost, stolen or broken you may struggle to gain access to your account.

How do I open an online business bank account?

Opening an online business bank is typically much simpler than opening a traditional business bank account. For most, you just need to prove that you’re registered as a business (some will even help you register with Companies House as part of your application); you’ll also need to prove your identity using an online verification portal. With some banks the process can take as little as 15 minutes.

» MORE: How to open a business bank account in the UK

Image source: Getty Images

About the Author

Vivienne Egan

Vivienne is a freelance business and finance writer, and the founder of Artists Make Money, a podcast and personal finance resource hub for people who work in the arts industry.

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