Banks will never return to five-day weeks in the office, some fintech firms aren’t quite ready for the main stage, and Starling Bank now has a small business market share about half the size of Barclays’.
Those were among the key takeaways from Starling co-founder and chief executive Anne Boden as she spoke to Financial News in a wide-ranging interview held at the Fintech Connect Leaders Summit on 30 November.
Boden said Starling now has 2.5 million customers, 400,000 of which are small businesses. With nearly £8bn in deposits, it is gearing up for an initial public offering within the next two years and plans to debut its services in Europe in 2022.
The challenger bank, which resorted to a fully remote business model during the pandemic, is now adopting a hybrid workplace. Boden also discussed the arrival of central bank digital currencies, why UK fintechs can’t seem to crack the US, and whether she’ll be taking a leaf out of ex-Twitter boss Jack Dorsey’s book any time soon.
During the pandemic, a lot of banks had to change the way they operate. What are some of the changes that Starling made in the last year that it intends to keep in place?
We are never going back to the old world. I’d spent many, many years — and I’m not going to tell you how many — going into the City every day. I was somebody who came into the City at 7am, grabbed a coffee, stayed all day and then did the same thing the following day.
I was hooked on coming into the office. Now even I love this very hybrid life, which is very, very efficient. We’re morphing to the stage where we can make work much more forgiving for people, they can fit really interesting jobs around a flexible working style.
Another fintech, Atom Bank, recently announced it was adopting a four-day working week. Is that something you’d ever consider, or believe is feasible for a bank to do?
The vast majority of people who work at Starling do customer-facing roles, and customers require Starling support 24/7. It’s not a 9 to 5 job. So the majority of our people do not work traditional hours; they work a shift pattern. Therefore we’ve always been very flexible.
And then you have people who are not in customer-facing roles. That’s not very many people. Those people are obviously working very flexibly in a hybrid role. We don’t really care when they work as long as they do a great job.
How well do you think banks are adapting to the new normal in the workplace?
We built Starling for a new world, a world where everything is in the Cloud and we’ve become very flexible. Our organisation was really tested during the pandemic and we responded well.
Some chief executives of some large banks are going out there and saying ‘get back to the office, it’s lazy to work in this hybrid world’. I think those people will be left behind. I believe these organisations will not be fit for purpose in the future.
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What is your top growth target for the year ahead?
In the UK, we have a huge market share in SME banking. I think we’ve got half the market share of Barclays now. We’ll grow and grow in the UK, but the next challenge is Europe where we’ll be offering a banking-as-a-service, extended finance proposition. I’m really hoping that we’ll be in many, many countries in the coming years.
One plan you’ve previously mentioned is an IPO, with London as the location of choice. How confident are you in meeting your projected 24-month timeframe for a listing?
We’re quite confident. We said that we were going to do something in that timeframe a couple of years ago. Six months ago, people were asking if we were going to go quicker, and I said no, we’re sticking to our plan. We’re still sticking to that plan.
Markets have been quite turbulent this year, and the investor reception to fintech companies which have listed such as Wise has been quite mixed. How much does that concern you?
Starling has always been a very solid organisation. We’ve never sought customers just for the sake of customer numbers. We’ve never gone out for silly valuations.
What you’ve seen in the market in the last six months is people who got above themselves, to be honest, when it was something that perhaps they weren’t ready for. When Starling comes to market, it will be ready and it will be solid.
Regulation is also shifting a lot at the moment, with changes soon to come on rules for cryptoassets and open banking. Does it make you feel less confident in knowing what Starling might face in the coming years?
We’ve always been very good at regulation. We decided to be a bank from day one, while other fintechs decided to play around with prepaid cards and go for a banking licence later on. We always knew that one of our differentiators was that we know how to run a tight ship.
There have been lots of market initiatives that have come out of the Competition and Markets Authority such as open banking, and I’ve been quoted quite a lot on that recently.
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The CMA said in 2015 that nobody was switching to new banks, and that nobody ever switched from one bank to another because it was too difficult. Over the last 12 months, more customers switched to Starling than any other bank in the UK, which proves that customers do switch.
I think that the CMA’s objective has now been achieved, with more customers switching and more new banks in the market. But it has not been open banking that has achieved that. Open banking is a great idea, but it has yet to fulfil its potential.
We recently saw two fintech banks, Monzo and N26, pull out of their expansion plans in the US. Why do you think a UK fintech landing in the US has yet to work out?
The US is very, very different from the UK. From a regulatory point of view, it’s very difficult to get a banking licence and they do things in a very different way.
Yes, lots of new banks are enticed to go into the US because their US-based venture capital investors think they can handle it. Many companies have tried and many companies have failed. It’s not for us. We go where we can adapt, and that’s Europe.
You’ve previously spoken about the threat that a central bank digital currency could pose to retail banking. The Bank of England has told banks there’s nothing to fear, as long as they are healthy and competitive. What are your thoughts on that response?
It’s important that as many people as possible from as many backgrounds as possible engage on this very important project. In a limited scope, it could be a replacement for a very good payments system, but it could be far more. The UK has to engage in this and start thinking about it, or we’ll be left behind.
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The question is that if we’re using [a digital sterling] for everyday payments, is it simply a replacement for faster payments? If it becomes a replacement, it’s going to be at least 10 years of work. I don’t think that’s going to happen. There’ll be some interim experiments, but I think it will be a long time before it can become an alternative to faster payments.
This week we saw Twitter co-founder Jack Dorsey resign from his role as it’s chief executive, leaving Mark Zuckerberg as the last remaining founder-CEO at the top of Silicon Valley. As a founder-CEO yourself, what do you think is the longevity for such a role?
Some founders go on for an awfully long time and see their organisation grow and go through lots of different iterations. Some founders enjoy it, and some founders don’t. I’m loving every minute of Starling, and I want to make Starling a global company.
All founders who start a company can go into this with different reasons. I founded Starling because I thought banking had lost its way. I am a passionate technologist, and what excites me is that suddenly after 20 or 30 years, people have realised that banking is actually a technology business.
The technologists are coming out of the back office and taking control, steering banking into a very different place from where we are now. It’s an exciting world, and I hope to be around for many, many years leading Starling.
Responses have been edited and condensed for clarity.
To contact the author of this story with feedback or news, email Emily Nicolle
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