OCBC bank most popular among S’pore start-ups, but it’s probably not the best

In Singapore, it looks like OCBC is the most popular bank among start-up entrepreneurs for creating a business account. That is the result of a poll SGE did on Facebook and LinkedIn in which 127 entrepreneurs responded.

Here’s what we asked them: “As a start-up founder in Singapore, which bank do you go to and set up your local account?”

Actually, OCBC is the leading bank by a mile at 45 percent of the respondents. The others, DBS (17 percent), UOB (15 percent), and Standard Chartered (13 percent), were not even close.

With such a yawning gap, it’s easy to assume that OCBC is the best choice for every entrepreneur — but that’s not necessary the case. To find out more, we dug a little deeper, speaking to entrepreneurs and comparing the different banks ourselves.

Banking services designed for start-ups?

Looking at the surface, only three out of the top four banks — namely, OCBC, DBS, and StanChart — have products designed for and marketed at upstart companies.

OCBC has the Business Entrepreneur Account, which offers a low initial deposit of S$500, instant account opening, and unlimited free cheques. DBS has the Entrepreneur’s Account for Start-ups, which also offers a minimum deposit of S$500, two year’s free subscription to their online banking portal, and more.

StanChart, meanwhile, has Essential Lite, which has no minimum balance requirement.

But all four banks (including UOB) offer company debit cards, which is crucial especially for Internet start-ups.

“For small businesses that purchase a lot of services and products on the Internet, for example, hosting, domain names, crowdsourced design, and so on, this is almost essential these days,” said Francis Teo, founder of Bluelambda, an SEO consultancy firm. He owns two business bank accounts at OCBC and DBS.

To Jason How, an entrepreneur who picked StanChart, the lack of a minimum balance requirement was a factor. “It makes one less worry for me,” he said.

Online banking services are important…

Many of the entrepreneurs that SGE polled have Internet businesses. In that regard, online banking services are something they really scrutinize. The consensus is that OCBC’s online banking platform is the most terrible of the bunch.

Said Francis: “To export a CSV file of your transactions, you basically need to queue your request in the system and then come back and download it later.”

CSV is a commonly used, widely supported file format to store numbers and text in tables. On the other hand, the export process for DBS is rather painless, he said.

Both banks, however, have crucial shortcomings. One of them is the inability to export bank statements in Quicken format, which is used by many SMEs. Francis added that start-ups often bootstrap their accounting operations and that the Quicken format is highly supported among affordable cloud-based solutions such as Xero.com, which he uses.

“Having to export the CSV, ‘tweak’ the information so it can be imported should be unnecessary.  Instead, the banks support export in SWIFT MT940.  I’m not sure if this format is popular amongst SMEs at all,” he said.

Browser support is also limited for both banks, especially on Mac. The Safari and Chrome browsers aren’t supported.

“We are no longer in the age where websites of any kind can be designed for a specific browser or platform, as browser standards are pretty consistent these days. The banks seem to be stuck in the stone age in this area.  On top of that, the platforms seem to be running on JSP, which is platform independent and should be able to run on any modern browser,” he said.

Francis is also unhappy that the banks only allows him to export data that is two to three months old. Since many SMEs do accounting on an annual basis, being able to export more than year’s worth of transactions would be a useful feature.

“If we neglect to export it every month, we’ll have to do data entry from the printed statement, which in my opinion is silly because the data is already readily available in electronic format in the bank’s database.”

DBS only allows users to reprint statements for a fee and are not able to provide file-based exports other than scans, he added.

Finally, Francis is unhappy with OCBC’s online security. To be more specific, he felt that the bank should use an enhanced premium SSL certificate that verifies both the identity of the website owner and encrypts data.  Otherwise, customers are vulnerable to hackers masquerading as the real OCBC site.

“The risk is probably low, but this is unacceptable security-wise for a financial institution,” he added.

…but don’t forget counter services too

While new-fangled online banking services are important to a new generation of Internet entrepreneurs, traditional counter services should be looked into as well.

Felix Sim, founder of Playlor!, a social sports platform (see feature), is an advocate of UOB’s banking services. His reason? He was able to open a business banking account at the bank within an hour.

“I had my company documents with me at that time and the branch manager was extremely helpful and customer-centric. He explained all there is to know about opening a business banking account with UOB, and he then got me a queue number with the customer service officer who opened my account on the spot,” he said.

On the other hand, he wasn’t impressed by StanChart, which did not open an account for him even after one month of back-and-forth.

Ease of obtaining loans from banks

Jason, however, is a happy customer with StanChart. Besides being impressed with their online banking platform, the major selling point for StanChart is that it is more “pro-SME” than the rest, especially in loaning out cash. While some have observed that Singapore banks in general are reluctant to help companies with less than $2 million in revenue, his experience was different.

“They listen out to SMEs and start-ups if they require loans, definitely more than DBS,” he said. When he sounded the bank out on a possible loan, they were the most ready to respond to Jason. StanChart also offers a lower interest rate for start-ups, something that DBS doesn’t do.

“DBS wouldn’t mind loaning us money, but the rate would simply be the same as normal,” he added.

On the other hand, Tan Boon Teck, founder of co-working space MakeSpace.sg, felt that DBS was rather responsive. He told us on Facebook that he was able to obtain a microloan and business loan in 2005 within two weeks, despite just starting a company with no track record then.

Avoid HSBC at all cost

So the consensus is that OCBC, StanChart, and DBS are the institutions to beat when it comes to banking for start-ups. While UOB is quite popular, it doesn’t seem like they are doing a lot of marketing geared towards the start-up space. Even their website doesn’t provide a lot of information.

What’s worse is that when I tried calling the UOB hotline the entire afternoon to find out more information, no one answered.

My only guess is that the UOB hotline is too hot to handle, because they can’t pick up the line.

You can strike them off the list.

As for the other three banks, OCBC is the one to avoid if you are a heavy user of online banking services, although Felix noted that the queue at the OCBC Jurong East branch is horrendous. Which means you might have difficulty getting things done even if you like to visit the bank yourself.

Meanwhile, StanChart is the bank to go for if having fast access to loans is a priority for your start-up. But in terms of customer service, StanChart and OCBC appear to be inconsistent as far as approving account openings go.

HSBC should definitely be avoided. It scored low on our poll for good reason — according to Felix, he was told to pay a $5,000 account opening fee, which made him “speechless”.

Finally, it’s interesting to note that while DBS seemed to be the only bank to offer a company debit card a few years back, that has changed. Now, all the top four banks offer the same service.

What’s encouraging is that start-up entrepreneurs do have plenty of choice with regards to starting a new bank account.

It’s clear that the competition between banks have benefited businesses in Singapore.

Photo: AIM Neutron

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