Reasons to Bank Small

offshore business bank

HSBC is often praised because of its international reputation and, specifically, the service it offers for clients who need to access funds worldwide or remotely open accounts in other countries.

It’s a great bank and you’ll get a terrific online banking platform, 24/7 phone support, and more.

But there’s a big problem that you expose yourself to when you stick your money with a large bank like HSBC, Deutsche, Citi, Standard, etc.

They have to continue to charge fees, sometimes justified but often not, to their client accounts, both for actively managing money in investment products, and for holding money in deposit accounts. They are some of the most heavily regulated and watched institutions in the world, and shareholders continue to push for bigger gains. The pressure they are under to make numbers means your account may get dinged, and they won’t care how much you complain.

These large institutions are measured by their volume. Account openings are treasured no matter how much a customer deposits, which is why they hook you with opening bonuses.

When you bank with HSBC, and banks like it, you are just another account number. Unless you have 7+ figures with them, you are not their most important customer. Sometimes, all you want to be is an account number, and for those purposes please stick with institutions like this.

But if you go where you’re treated best, and want to feel like a valuable customer, than I’d recommend sticking with a small, local bank. Here’s why.

Accounts fees are often minimal, if not waived entirely. They have less stringent requirements to avoid fees compared to larger banks. If my account does get hit with some sort of fee, I can usually call my local contact and they will remove it for me, as long as it is within reason.

Customer service is much more personalized. One of my businesses are set up with a small bank that provides me with coffee, snacks, and a cigar room that I can visit whenever I’d like. They even invite us to have informal meetings with our own clients there. I’m not much of a smoker, but it’s very clear that they want us to feel comfortable and valued. I can not imagine Bank of America offering this level of service no matter what product I open with them.

One of the banks I work with has only $30MM in assets. Our business loan of $1,000,000 USD was treated as a huge victory for the bank to issue, which we paid back on time and with interest. That same loan was turned down by several large banks. The point? Small banks are eager to get your business, whereas big banks have enough business that they can turn you down if you don’t check every box.

Everything is negotiable. From your account fees, to your rates and due dates. Big banks tend to have a take it or leave it attitude unless you have significant funds (7+ figures) with them.

There are some downsides too, like limited functionality on mobile or online-banking platforms, and the risk that if a single large loan goes bad, or if they lose a large client, it could break the bank.

Choose the best bank for your needs.

But if you want to feel like a valuable customer, go small.

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