Starling Bank launches one-year saver product for SMEs

The new functionality is embedded within the app, and account holders can now transfer funds in-app or online.

Deposits to the fixed saver program are secured for a year, with accrued interest paid out at the end of the year. The fixed term begins on the day the funds are deposited. Clients have 14 days from the date of initial opening to close the Business Fixed Saver. Individual 1-Year Business Fixed Savers cannot be topped up.

Starling's initial savings product, with a 3.25% interest rate for one-year fixed-term deposits for consumers, launched in mid-December.

The program is similarly available on deposits ranging from GBP 2,000 to GBP 1 million, and it adds Starling to the roster of fintechs with a new focus on savings for 2023. Companies will be allowed to open multiple Fixed Savers accounts in order to maximise their savings.

Challenges

In 2022, Starling Bank had a number of difficulties. It decided to withdraw its application for a European banking licence from the Irish central bank in June. Starling's proposal had already encountered issues, with the digital lender briefly postponing negotiations with authorities in 2020 due to the COVID-19 epidemic. The bank began the process of becoming EU-regulated in 2018, but its most recent move was motivated by a desire to focus on marketing its SaaS product and expanding into new lending sectors.

Later, in August 2022, the bank was thrust into the spotlight when the UK government released the first numbers on the performance of its three emergency COVID-19 loan guarantee programmes, forcing banks such as Starling Bank to explain their reliance on state-backed funding.

For Starling, bounce back loans were critical in its evolution from a digital upstart to a full-fledged lender in a matter of years. The bank's latest records show that GBP 33 million of the GBP 100 million taxpayer subsidy was used to offset administrative costs, allowing Starling to turn a profit.

Opportunities

Yet, Starling Bank had a successful 2022. It began offering its Bills Manager service to businesses in July 2022 to help them manage their accounts. Small companies can have a direct debit or standing order withdrawn from money placed in 'Savings Spaces' rather than their primary account. Payments are automatically synced with accounting software Xero and FreeAgent, both of which are available through the Starling Marketplace, as well as the bank's Accounting Toolkit.

Bulk Payments, a subscription service intended to support payroll and refund employee costs, was introduced in September 2022. Consumers just add the function to their app subscriptions, go into Online Banking, and fill out a template with the recipients' information.

Lastly, in December 2022, Starling Bank introduced virtual cards and upgraded its 'Spending Insights' to assist individuals manage their spending and have a better understanding of their budgets. Customers of Starling can have up to five virtual cards at once and can select a different colour for each one for free.