Challenger banks, oases for SMEs - interview with Starling Bank

Tuesday 24 November 2020 11:23 CET | Editor: Alin Popa | Interview

Anna Mitchell, Starling’s Head of Marketplace, shares the recipe behind the success of Starling and how the challenger bank is positioned to enable SMEs to thrive in challenging times with the use of APIs

Since the last economic crisis, the financial services landscape has been evolving at pace. Moreover, the quest for delivering the seamless customer experience, for either end-consumers or SMEs, has left incumbents reeling and has pushed them to re-evaluate their strategies.

Underserved by traditional banks and impatient with their lack of progress in improving services, small businesses are already turning to alternative financial service providers for a range of products and services, such as payments, lending, legal advice, and more.

Technology adoption coupled with an agile methodology for developing financial products enable financial institutions to quickly react to customers’ needs … or as an industry-leading banker and Starling Bank founder and CEO Anne Boden once said: ‘technology could transform the way people manage their money and serve customers in a way that traditional banks hadn’t’.

How did the Starling Bank story start?

Starling launched in 2014 and was created to offer a new kind of banking, one which made money management easier. We are a digital-only bank and to date we have more than 1.4 million customers, including more than 180,000 business accounts which can choose from personal, business, sole trader, and joint accounts.

Starling’s personal, business, and sole trader bank accounts are free. We also offer our customers access to several paid-for subscriptions including Euros, USD and, most recently, our business toolkit which provides book-keeping services. Additionally, we give them the chance to use pioneering payment services which leverage our open APIs to institutional clients. Collectively, these services aim to reimagine banking for life today, putting the tools people need to feel good about money in the palm of their hand.

What are the core challenges for SMEs and how do open APIs and marketplaces like Starling’s help solve these challenges?

In business, it pays to be connected and this is the idea behind the Starling Marketplace which is already used by one in three of our business customers. Adopting an ecosystem approach from the outset, we launched our open APIs in September 2017, and since then we have built up a vibrant range of integrations with third-party products and services which customers can link to their Starling account through the in-app Marketplace.

Today’s small businesses are operating in a world where digital services are crafted around their needs. As they grow frustrated with the traditional way of doing banking, companies are turning to alternative financial service providers, fintechs, and challenger banks that bring to the market solutions to resolve their pain points and deliver value-added services.

There are now 26 services live in the Marketplace, from accounting integrations with Xero and Quickbooks, and invoice insurance from Nimbla for Starling’s business customers, to pensions from PensionBee and digital receipts from Flux for personal customers. The plan is to continue expanding the range of services in the Marketplace and look at how we deepen some of the existing integrations to provide more utility for customers.

Open APIs are an integral part of our technology stack delivering innovative solutions and better integration with customers’ banking and the rest of their business tools. These API integrations help data move between the different tools which customers use, improving transparency of payments flow, which can often be another source of uncertainty for business customers for whom managing cash flow is so important.

Going forward, open APIs can play a valuable role in lending too, which is great, because access to capital is even more critical for SMEs than ever before. Anything that can help improve that process will offer value. At the end of May 2020, we raised GBP 40 million, bringing the amount of investment raised this year to GBP 100 million and our overall total to GBP 363 million. This money will help us expand the bank, including services to support small businesses – so many have been hit hard by the coronavirus emergency.

Starling moved quickly when the current crisis hit. It quickly got accredited to lend to SMEs under the government-based Coronavirus Business Interruption Loan and the Bounce Back Loan Schemes. In addition, Starling formed a partnership with the lender Funding Circle, to provide GBP 300 million of lending to small businesses under the Coronavirus Business Interruption Loan Scheme. It is Starling’s agile way of working that enabled it to move so quickly on all of these fronts.

Open Banking allows consumers and SMEs to access and share their data with TPPs to develop new products and services – how do you secure data access/ transfers/ storage?

In addition to the Marketplace services, Starling also has a vibrant developer community with several third-party providers, such as Emma and Yolt, which access Starling data with customer consent. Starling is built in the cloud with RESTful open APIs that can be integrated into any existing platform or used to build innovative new products and services. All third parties seeking to access Starling’s customer data go through an onboarding process. For open banking applications seeking access to account information service providers (AISP) and payment initiation service providers (PISP) endpoints we follow the guidelines set out in regulation. 

For Marketplace services which go beyond open banking, we undertake a much more rigorous due diligence assessment that incorporates information security, data protection, and fraud checks. We want to be sure the services we promote to our customers adhere to the levels of security that we as a bank want to be able to provide to our customers. Consumer trust is obviously integral for us as a bank and as an extension of our core offering these Marketplace integrations need to be equally reliable.

The interview was originally published in Global Open Banking Report 2020, which follows the journey from Open Banking to Open Finance and Open Data Economy and provides key insights about the benefits of Open Finance for different areas of financial service.

About Anna Mitchell

As Head of Starling Marketplace, Anna leads on the product development of the Starling’s open APIs and third-party integrations across both retail and SME. Starling’s Marketplace offers a range of complementary products customers can access in-app and link to their bank account to enjoy extra functionality. Popular integrations currently include accounting software Xero and communications platform Slack. Anna brings to Starling cross-sector experience of product innovation having previously worked on OVO Energy’s smart technology propositions for electric vehicle drivers and a number of cleantech startups. 

About Starling Bank

Starling is a digital bank based in the UK. Its app offers personal, business, joint, and euro current accounts on smartphones. The Starling Marketplace offers customers in-app access to third-party financial services. Starling also offers B2B banking and payments services.


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Keywords: Anna Mitchell, Starling, SMEs, APIs, incumbents, payments , lending, financial institutions, digital banking, alternative financial services, fintechs, challenger bank, invoice insurance, digital receipts, Coronavirus Business Interruption Loan, Bounce Back Loan Schemes, TPPs
Categories: Banking & Fintech
Countries: United Kingdom
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Banking & Fintech

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