4 Best Alternatives to Traditional Banks
You accept payments online. You work across borders. You manage everything from a laptop. But your bank still requires paperwork, branch visits, and charges high fees for basic services.
The good news is that there are many alternatives built for how business works today, with better rates, lower fees, and tools designed for digital operations.
In this article, I will guide you through the 4 business banking alternatives to traditional banks, providing insights to help you choose what’s right for your situation.
This article covers:
✅ Top digital-first alternatives for business banking
✅ Pros and cons of each option
✅ Tips to help you decide what fits your business
Best Traditional Bank Alternatives
Let’s see the 4 best alternatives to traditional banking.
| Type | What It Offers | Best For |
|---|---|---|
| Fintech Companies | Tech-driven financial platforms offering multi-currency accounts and FX tools | Businesses with international payments or remote operations |
| Online Banks | Fully licensed, digital-first banks offering current accounts with a deposit protection scheme | Small businesses and freelancers seeking full-featured, digital banking |
| Payment Service Providers | Platforms for sending, receiving, and managing payments without full banking features | Ecommerce sellers and freelancers who need flexible ways to collect payments |
| Money Transfer Services | Services focused on international payments with better exchange rates than banks | Businesses that regularly send or receive large volumes of cross-border payments |
1
Fintech Companies
Best For: Busy business owners seeking innovative and cost-effective financial solutions that are accessible beyond traditional banking hours.
Fintech companies (short for financial technology) are regulated service providers that leverage advanced technology and data analytics to offer business-friendly financial solutions.
While they aren’t licensed banks, many are authorised as payment institutions or money service operators, depending on the jurisdiction. Their offerings often include multi-currency accounts, international transfers, virtual cards, and advanced FX tools, all accessible online.
Fintech companies cannot offer deposit insurance directly. However, they can do so through their custodian banks.
Example of a Fintech Company
Pros and Cons of Fintech Companies
✅Pros
- Multi-currency accounts with transparent pricing and better rates
- Remote-friendly onboarding with fewer eligibility barriers.
- Offer personalised and responsive customer support through multiple channels
❌Cons
- Limited banking services, typically no loans, overdrafts, or investment services.
- No physical branches.
2
Online Banks
Best For: Entrepreneurs seeking digital-first banking experiences with competitive APY, and comfortable with online-only banking services.
Online banks, sometimes called challenger banks, neobanks, or virtual banks, are fully licensed and regulated banks that operate without physical branches. All services, including account access, transactions, debit cards and support, are managed through mobile banking apps or websites.
Since they operate entirely online, these banks typically offer more competitive fees and interest rates than traditional banks. Opening an account is also simpler, often requiring only digital ID verification and a few basic documents with no minimum balance required.
Examples of Online Banks
Pros and Cons of Online Banks
✅Pros
- Fast, paperless onboarding
- Lower fees than traditional banks
- 24/7 access and customer support via mobile app or desktop
❌Cons
- No bank branches
- May not suit cash-heavy businesses.
Insight: Explore our comparison between online and traditional banks and learn more about online banking security.
3
Payment Service Providers
Best For: Ecommerce businesses seeking flexible methods to send and receive payments without relying on a full business bank account.
Payment Service Providers (PSPs) are licensed platforms that help businesses process online payments quickly and securely. They act as intermediaries between customers, businesses, and banks, offering tools for collecting card payments, managing payouts, and converting currencies in one place.
While PSPs don’t offer full banking services like current accounts or lending, they cover essential features for businesses operating online. Most also include integrations with ecommerce platforms (e.g. Shopify, WooCommerce) and support for digital wallets, subscription billing, and multi-currency settlement.
Their setup is typically fast, and they offer flexible onboarding and wide coverage of global payment methods, making them a popular choice for businesses with international customers or remote teams.
Examples of Payment Service Providers
Pros and Cons of Fintech Companies
✅ Pros
- Quick setup for accepting online payments globally
- Easy and seamless integration with ecommerce tools to accept and process payments
❌Cons
- Not a full replacement for a business checking account, as they offer only money transfer solutions.
- Accessing your funds may take time or involve withdrawal fees, depending on the provider.
Looking into PSP? Read our Stripe vs PayPal review to discover which provider is right for your business.
4
Money Transfer Services
Best For: Businesses that regularly send or receive international payments with lower fees and faster wire transfers than traditional banks.
Money transfer services are licensed financial institutions that specialise in cross-border payments rather than full-service banking. While they don’t offer current accounts or business loans, they provide tools for international transactions, currency exchange, and payout management.
These services often provide better exchange rates, lower fees, and faster delivery times compared to traditional banks. Some also let you receive payments in foreign currencies using local account details, so you can get paid like a local without opening a bank account overseas.
Examples of Money Transfer Services
Pros and Cons of Money Transfer Services
✅ Pros
- Lower fees and better exchange rates than traditional banks.
- Send and receive payments in multiple currencies.
- Some services offer local account details to get paid globally.
❌Cons
- Not a full business account, as they focus on money transfer solutions.
- Often needs to link with a separate bank account to withdraw funds.
Which Option Is Right for My Business?
Still unsure which provider fits best? Here’s how I recommend thinking through your options:
- Do you need a reliable business account with deposit protection and everyday banking tools?
Look at online banks. Providers like Monzo, N26, and Axos Bank offer fully licensed business accounts, digital onboarding, and mobile access, without the need to visit bank branches. - Is your business global or remote-first, with payments in multiple currencies?
Then a fintech company like Statrys, Wise, or Revolut might be a better fit. These platforms are built for international businesses that need multi-currency accounts and fewer restrictions on where you’re based. - Are you mainly focused on selling online and collecting payments from customers?
A payment service provider like Stripe, PayPal, or Adyen can help you set up checkout flows, subscriptions, or digital invoices. They’re not banks, but they’re essential for digital sales. - Do you often send or receive money internationally?
That’s where money transfer services like OFX or TorFX come in. They offer lower exchange rates, no hidden fees, and support for forward contracts, which helps manage exchange rate risk.
Recommend: Consider opening multiple business accounts with different types of providers to leverage various benefits.
Final Note
After going through the different alternatives to traditional banking, you may have a better idea of what suits the needs of your business.
It's important to weigh out the advantages and drawbacks of each alternative in comparison to what you prioritise as a business. Ultimately, there will be an alternative that will suit your needs.
You may also find that a single solution may need to cover all your requirements, so signing up with two or more alternatives might be the way to go.
FAQs
Is there an alternative to banking?
Yes. Depending on your needs, you can use online banks, fintech platforms, payment service providers, or money transfer services. Some businesses also consider community banks or credit unions for local, relationship-based service, but these may offer fewer digital features or international options.
