Can I Have Both Digital and Traditional Business Bank Account in Singapore?

You may have come across terms like "digital business bank account" or "neobanks" recently. Big players like Wise, Airwallex, and Aspire are competing with traditional banks to offer banking services to aspiring entrepreneurs not just in Singapore but around the world. Interestingly, some people prefer the flexibility of using both types of banks instead of choosing just one.

In this article, we'll explore the possibilities of having multiple business bank accounts in Singapore. We'll focus on the advantages and differences between digital business accounts and commercial bank accounts. You'll discover the potential benefits each account type offers and gain insights into how they can complement your financial strategies.

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What is a Business Bank Account?

A business bank account is like a special bank account just for your business. It's registered under your company's name and specifically for handling all your business-related transactions. One of the main reasons people get a business bank account is to keep things separate from their personal finances. This separation helps avoid any conflicts of interest and keeps tax matters nice and tidy.

Moreover, a business bank account offers a range of benefits that contribute to the success and credibility of the company. Here are some key advantages:

1. Establishing Trust and Credibility: By utilising a dedicated business bank account, you can build trust and credibility among clients, suppliers, and employees. This professional image enhances relationships and opens doors to new opportunities.
2. Building Credit History: Having a business bank account allows you to develop a robust credit history. Timely payments, financial stability, and responsible management actively contribute to the establishment of a positive credit profile. A positive credit history becomes essential in securing loans, obtaining favorable financing terms, and fostering future growth.
3. Enhancing Cash Flow Management: With a business bank account, businesses gain effective cash flow management capabilities. It's like having your own financial control center to make smart decisions and keep your business running smoothly.

‍And here's the best part: business bank accounts offer special features designed just for businesses. Think processing salary payments, merchant services, issuing checks, and even allowing multiple users to access the account. These features are like little superpowers that make running your business a breeze.

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What are the Main Differences Between Business Account and Traditional Bank?

A traditional bank is a regular bank that operates through physical branches and provides face-to-face customer service. These banks often offer a variety of financial assistance and are capable of managing complex financial transactions.

‍One of the biggest differences between these two is that business account services are conducted entirely online while traditional banks have physical branches in addition to online banking services.

Traditional banks are also fully licensed and chartered, while business account providers may or may not be fully licensed. Therefore, we generally see them partnering with traditional banks to insure against their products and comply with banking regulations.

Another difference is that traditional banks offer a wide range of ancillary products and services, including credit cards, financial advising, wealth management, loans, and more. As a result, they tend to have a large customer base and longer processing hours.

On the other hand, most providers of business accounts typically offer a more focused suite of products, such as expense tracking and multi-currency transfers. However, this narrower focus allows them to dedicate their efforts to creating automation tools tailored specifically for small business owners,like yours to effectively manage business finances.

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How Do People Select Based on Their Needs?

Thanks to their technology-first focus, digital business accounts are extremely convenient and easy to use. They are more innovative than traditional banks and are constantly adding new features to their apps.

Another attractive feature of business account is that they tend to have lower fees for their services than traditional banks. Since they do not have physical branches, they have lower overhead costs and can hence pass these savings on to their customers through low fees and higher interest rates on their accounts.

An important reason why people choose a traditional bank is the ability to talk to a customer service representative in person. This is particularly important for people who prefer an old-fashioned approach, have complex banking needs, or often carry out lengthy financial transactions that require explanations in person.

Another benefit of traditional banks is that they provide a wide range of financial services to their customers. If you view your bank as a financial partner rather than just a place to store your money, a traditional bank will be able to help you plan for your retirement, buy or refinance a house, manage your wealth, among other functions.

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Is It Difficult to Open A Traditional Bank Account for Business in Singapore?

Yes, especially for business owners who are situated outside of Singapore. Opening a bank account in Singapore can sometimes be a bit tricky. Here's why:

1. Strict Compliance Requirements: Singapore has stringent regulations to prevent money laundering and terrorist financing. This means banks have to do thorough checks and collect lots of documents to make sure everything is above board. It can be a time-consuming and detailed process.
2. Extra Scrutiny for Certain Activities: If your business involves high-risk industries, international trade, or cryptocurrencies, banks may take a closer look. They want to ensure they understand the risks associated with these activities and comply with regulations.
3. Showing Business Substance: Banks want to see that your business is legit and has substance. They may ask for proof of a physical office, evidence of operational activities, and a solid business plan. Startups or businesses without a long track record might find this aspect challenging.
4. Physical Visits for Paperwork Filing: Some banks in Singapore may require business owners to make in-person visits for completing paperwork and finalizing the account opening process. This can be inconvenient, especially for businesses with limited time or for entrepreneurs residing outside of Singapore.
5. Competition and Risk Aversion: Banks in Singapore face intense competition and are more cautious due to increased regulatory scrutiny. They want to avoid any potential risks or compliance issues, which can make them more selective when opening corporate accounts.

While opening a corporate bank account in Singapore may have its challenges, seeking guidance from experienced professionals or corporate service providers can help simplify the process.  Or you can always consider opening a business account that takes half of the time to get you ready.

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→  Create a business account under a minute

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Can I Have Multiple Business Accounts?

Yes, you can! In fact, this is probably the smartest way to get the best of all business bank accounts. As long as it suits your personal and business needs and you believe that you can manage two rather different types of bank accounts without getting confused, you can feel free to set up an account at both institutions. You may read more on how to utilise them better here.

Free Business Account Set Up

At Sprout Asia, our mission is to empower you to excel in your expertise while effectively managing your finances. That's why we're thrilled to announce the launch of our brand-new business account, Grof designed to make your financial journey hassle-free. With no minimum balance requirements and zero monthly fees to get started, we're removing the barriers that often come with traditional banking.

For our existing clients, we're excited to offer a complimentary onboarding call to ensure a seamless transition to our business account. We're here to support you every step of the way, making sure your experience is smooth and effortless.

Join us in revolutionising the future of business finance. Say goodbye to unnecessary fees and restrictions, and embrace a banking solution that aligns with your entrepreneurial spirit. It's time to focus on what you do best, while we take care of your financial needs.  Create an account here today!

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References

https://dollarsandsense.sg/heres-smes-consider-multiple-business-bank-accounts/#:~:text=There%20are%20no%20restrictions%20on,bank%20accounts%20can%20be%20useful.

https://www.gobusiness.gov.sg/start-a-business/open-a-corporate-bank-account/

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