The first thing that strikes me when I meet Anne Boden in Starling's London headquarters is that we're not joined by a PR rep. In the maze of startup fiascos and constant news cycles it's become commonplace for major founders to call in disarmingly friendly, shrewd publicists to sit in on interviews.
But Boden doesn't need handholding. Brutishly driven and comfortable in a man’s world, she’s set up a UK bank from scratch, abandoning her career in the financial heartlands as part of RBS and Lloyds to 'go-it-alone'. So while Starling may still be small by traditional banking standards, Boden is uncowed.
“I’m not threatened by the big banks,” Boden, 59, tells Sifted. “[But they] will copy absolutely everything people like us do,” she adds, as her former employer RBS gears up to launch its own digital business bank, Mettle.
Boden wears her decades of banking experience unashamedly like her trademark, brightly-coloured shawls. Her insights into the inner workings of opaque banking mechanisms carry weight and, by her own assessment, mean she’s less “naive” than her fellow challengers (which include Revolut’s Nikolay Storonsky and Monzo’s Tom Blomfield).
“I’m a bit different. I’ve got a lot of knowledge.”
Launched in 2017, Starling recently hit 1m users. In comparison, London-based bank rival Monzo boasts 3m customers and Germany’s N26 has 3.5m. Still, internal research at Barclays shows Starling is growing at a similar pace taking into account its belated app-launch. Meanwhile, First Direct, a digital division of HSBC that launched in 1989 has 1.45m users.
Starling can also claim a robust deposit base, having now hit £1bn in customer assets. That suggests a healthy number of customers are using the bank as a primary account rather than as an ad-hoc spending tool. In comparison, digital competitor Revolut reported £902m in deposits last year — despite having six times the number of customers. Starling is also reportedly on-track to reach profitability by the end of 2020, a rarity amid the challengers.
Setting the tone
Starling’s rise has elevated its chief executive to near-celebrity status. Yet Boden remains an enigma within London’s financial establishment. Unlike so many of her colleagues she did not have a privileged upbringing, growing up in Bonymaen in Swansea, Wales, the daughter of a steelworker and a department store worker. She went to Cefn Hengoed Comprehensive and then went on to study chemistry and computer sciences at the local university.
She later bustled into finance, moving to London to work on the counters of Lloyds Bank in 1981. Working her way up, she eventually became chief operating officer for Allied Irish Banks (AIB), one of Ireland’s largest banks, in the wake of the financial crisis.
From the outside Boden’s demeanour can be summarised as cheerful militancy. She pulses between hearty laughs and furrowed brows, noting that handling people’s money is a “serious” job. She likes employees to “do rather than talk” and has banned internal presentations.
She’s also reluctant to hire external Big 4 consultants to provide strategy advice (although she reveals she convinced KPMG to help launch Starling on a “no success, no fee” basis).
"It's very important an organisation has its own brain... It's surprising how lazy people become,” she comments, encouraging employees to read to find the answers independently.
Perhaps unsurprisingly, Boden's style in business has split opinion. Several former colleagues contacted by Sifted labelled Boden "a nightmare" to work with. Equally, more than one deemed her a "genius". Investors, at least, seem to agree with the latter, pumping in a further £30m to her company last month.
Pulling in the masses
The next step for Starling, according to Boden, is to boost its small business client base.
Currently only around 80,000 of its 1m users are enterprises, a disappointing ratio for a company that presents primarily as a business bank. Small businesses are lucrative clients given their affinity for loans and larger deposits and hence have been similarly targeted by fintechs like OakNorth and Tide.
For the same reason traditional banks are also working to lure small businesses back, with the upcoming launch of RBS/NatWest’s Mettle and HSBC’s Kinetic (which has just begun beta testing). The incumbents have a decent advantage given they already have large customer bases and a major loan book. But as a former insider Boden questions their ability to innovate safely and sustainably.
"I came from that world... if I thought I was going to be able to create that I would have done," says Boden, pointing to the burden of legacy infrastructure. "It's very difficult to replicate the energy and technology of a startup."
On top of business clients Starling also wants to lure in a second wave of retail users who aren't inherently tech savvy or living near innovation hubs like London. This seems to be going to plan, given that Starling's userbase is now growing fastest outside of the UK capital.
Part of that push is a mass marketing campaign, which includes one advert stating, 'You're not bad with money, you're just with the wrong bank'.
But I question that narrative — some people are just bad with money?
"What we're trying to say there is stop reinforcing stereotypes [and try] to allow people to reset their perceptions of themselves... We want to give people a fresh start,” Boden explains, having previously criticised big banks for “unfair” fees.
“If you say you're bad with money, you're going to be bad at it. It's like people, particularly girls, who say they can't do maths.”
Beyond the UK
Boden reveals that expanding into Europe will likely involve acquiring small, overseas financial-services firms. She believes this is essential to "plug in to the cultural differences" across the continent and to boost Starling's chances of building a local customer base.
"[Any M&A] would be with very small companies, of less than 10 employees."
Another big push will be in Ireland, where Starling hopes to attract “millions and millions” when it launches there in 2020. However, this advancement has been delayed by hiccups in attaining an Irish banking license, which it wants so it can avoid disruption in the event of a hard Brexit.
Boden also confirmed the bank does not have any plans to expand into the US, where its fellow digital competitors are beginning to launch.
The logic here is simple: keep costs down to generate profits sooner rather than later (it's no secret that this is at the heart of Starling’s business model). In tandem, Starling can maximise its UK banking license to facilitate loans and to boost its lucrative range of business-to-business (B2B) partnerships.
As for Boden personally, she now intends to spend less time on the conference floor and “more time with ordinary people”. She’s compelled to find a way to fix real problems, she says, and for a second I get a glimpse of a future politician in the making.
It wouldn't be totally impossible; by all accounts, she is a force to be reckoned with — and she knows it.