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YouGov research reveals that more than half of the UK's SMEs are earning less than 0.10% on their cash

7th June 2018

These are challenging times for the UK's SMEs – the engine room of the country's economy – with uncertainty around Brexit and rising costs adding to the headwinds they face. Compounding SME woes are the historically low interest rates that the majority are getting from their banks. This new YouGov research1 highlights these significant challenges. Of the 615 SME Senior Managers who expressed an opinion, the YouGov survey found that:


More than half of SMEs are earning less than 0.10% on their cash at bank.

  • 92% of SMEs are earning the equivalent of the Bank of England Base Rate (0.50%) or less.
  • This is despite a number of UK banks providing rates of up to 1.20% for short term deposits.

More than one in three SMEs hold all of their cash in their current account.

  • £104bn2 is held in 5.5 million3 business current accounts by SMEs but more than 80% of these accounts pay 0% interest3.
  • Concentration of a company's cash in a single account also represents a potential risk to the business if the value exceeds the FSCS deposit protection limit (of £85,000 per qualifying depositor per authorised bank)4.
  • This is not just an issue for small companies, 25% of those with a turnover of £10m+, still hold all their cash in their current account and have no separate deposit account for their ‘excess cash’ (i.e., surplus cash which is not required for the day-to-day running of the company).
  • 36% of well established businesses (that have been trading for more than 10 years) still hold all their cash in their current account.

More than three quarters of SMEs are dissatisfied with the interest rate they are receiving.

  • 86% of SMEs in the manufacturing sector are dissatisfied with the interest rate they are receiving.

40% of SMEs feel that the amount of time and paperwork involved in opening new accounts is too much hassle.

  • Only 14% of SMEs said that they don't care about earning more interest and just a third said that they would be worried about the risks of placing deposits with a non-high street bank, but despite this just 10% of SMEs hold such accounts.

Tom Senior, Commercial Director of Savings at Cambridge & Counties Bank, commented on the findings, "We recognise that many UK SMEs are receiving low rates on their cash deposits and that this can be because opening multiple accounts is too time consuming for them. That is why we offer our products through the Flagstone platform which enables SMEs to earn up to 1.70% Gross/AER on our three-year bond. Flagstone deliver a way for clients to access not just our best product, but those of other banks to enable customers to open multiple cash deposit accounts with a single application and really make the most of their savings.”

Simon Merchant, Co-Managing Partner at London based fintech Flagstone said, "We commissioned this research from YouGov because we knew that a persistent low interest rate environment combined with the onerous and time-consuming nature of deposit account opening processes had created client inertia, resulting in sub-optimal returns for SMEs and increased risk exposure through a lack of diversification. We wanted to understand the full extent of this problem and the scale of the issue for these businesses. Flagstone uses technology to provide SMEs with a simple and secure solution - empowering them to earn more interest income and also reduce their risk exposure."

Flagstone's online cash platform, a unique proposition in the UK, enables SMEs to open multiple higher interest and exclusive deposit accounts in just a matter of clicks on completion of a single agreement, without the need for additional paperwork for every new account selected. The benefits of using Flagstone’s unique cash platform include higher interest income by allowing clients to choose from more than 450 deposit accounts, as well as the ability to manage risk more effectively by diversifying deposits between up to 24 different banks. This diversification can also increase the protection that clients’ deposits are provided collectively by the Financial Services Compensation Scheme (FSCS).

All of the UK banks on the Flagstone platform are authorised by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and the PRA. Deposits placed with any of these banks via the Flagstone platform are afforded exactly the same Financial Services Compensation Scheme protection (i.e. £85,000 per depositor per authorised institution) as if the client placed the deposit directly with the bank.

  1. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 615 SME Senior Managers. Fieldwork was undertaken between 25th - 29th September 2017. The survey was carried out online. The figures have been weighted and are representative of British business size.
  2. Source - BBA (British Bankers’ Association) ‘Bank Support for SMEs’ Report - Q1 2017.
  3. Source - Competition & Markets Authority ‘Retail Banking Market Investigation’ - 9 August 2016.
  4. Source - www.fscs.org.uk


YouGov SME Survey and Findings








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