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HSBC has unveiled plans to cut charges to small business customers in a move it says will save firms £13m a year Getty

HSBC has unveiled plans to cut charges to small business customers in a move, it says, will save firms £13m ($16.7m) a year.

The move said it will scrap or cut back many of the charges for many of the 960,000 small and medium-sized firms who bank with the lender, saving them an average of £70 a year.

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The bank said it will today extend its electronic banking service, which has fewer charges, from firms with a turnover of £500,000 or less to businesses with annual sales of up to £2m.

This will mean 35p charges to make direct debits will now be free and charges for ATM withdrawals will also go among a number of other fees.

HSBC UK head of commercial banking Ian Stuart said: "These charges sound small, but they mount up over a year. And they also niggle customers. Growing small firms often don't have time to review existing contracts with suppliers, but we looked at what we can do better and how we can help with costs."

HSBC estimates the changes will benefit 190,000 customers. The bank added it will review customer accounts every 12 months to make sure they are on the best tariff for their business.

Established banks and financial services companies are investing digital technology in a bid to attract customers, cut costs and buoy profits.

However, they are coming under increasing pressure from a number of more nimble start-ups. Digitally focused fintech companies have attracted billions of dollars of investment. Figures from advisory company KPMG show global investment in fintech companies totalled $9.4bn in the second quarter of the year.

UK financial services watchdog the Competition and Markets Authority's (CMA) said in August that "older and larger banks do not have to compete hard enough for customers' business, and smaller and newer banks find it difficult to grow".

The CMA added that only 4% of business customers switch to a different bank in any year, adding that small firms could save around £80 a year by switching their provider.

HSBC