The hidden costs: What traditional banking actually costs your SME

Most SME owners focus on their monthly account fee and assume that's their banking cost. But, when you factor in hidden charges, wasted time, and missed opportunities, the real figure will often shock you.

In this episode of the Lula SME Growth Series, Wayne Ramgath, VP of Banking at Lula, reveals why most small businesses drastically underestimate their true banking costs.

The iceberg effect

“It's not just about the fees you see; it's about the productivity you lose,” Ramgath explains.

Hidden transaction charges, out-of-bundle fees, statement costs, and digital payment charges can easily double or triple your expected banking bill. But that's just the beginning.

The time thief

Perhaps more shocking is the time cost. Ramgath calculates that SMEs spend an average of 12-15 hours monthly on banking admin, branch visits, payment reconciliations, and resolving transaction issues.

“The most expensive part of traditional banking isn't on the invoice. It's in the hours lost to inefficiency,” he notes.

For a business generating R50 000 monthly revenue, those 15 hours of banking admin represent an indirect cost of over R3 400 per month.

The opportunity trap

Traditional banking also creates opportunity costs that never appear on statements. Capital sitting in low-return accounts misses higher-yield opportunities, while inefficient systems force SME owners into reactive rather than strategic thinking.

“When choosing your next bank, look for a partner, not just a banking provider,” Ramgath advises.

The audit exercise

Ramgath provides a practical framework for SMEs to calculate their real banking costs:

Step 1: Download 3-6 months of bank statements

Step 2: Separate service charges from transaction fees

Step 3: Calculate time spent on banking tasks monthly

Step 4: Multiply that time by your hourly revenue rate

Step 5: Add hidden fees, time costs, and opportunity costs

The total often shocks business owners who thought they understood their banking expenses.

Finding the solution

Many traditional banks force SMEs into adapted products designed for general customers rather than specific business needs. “Paying high fees for generic products that don't truly fit your business needs is definitely not essential,” Ramgath emphasises.

The answer isn't just finding cheaper banking – it's finding smarter banking that offers transparent pricing, tailored solutions, and dedicated support that understands SME operations.

The question isn't whether you can afford better banking. It's whether you can afford not to make the change.