Digital, and mostly mobile-only, SME business accounts have become the new battleground for challenger banks in the UK. A customer segment that for so long felt it had to put up and shut up when it came to banking facilities is now on a slow but purposeful march away from the high street – taking its £1.9trillion turnover with it. Let’s not kid ourselves; there’s still a long way to go. The big five retain around three-quarters of the SME banking market, but the growth trajectory of new entrants is steep and competition to provide services as intuitive, fast, flexible and cheap to business customers as they are to personal account holders, is intense. According to Anne Boden, founder of Starling Bank, which launched its first business accounts in March 2018, app-based banking that doesn’t distinguish between work admin and life admin is the way to go. That was reflected in a recent Starling ad campaign, carrying the slogans ‘say hello to a work/life bank balance’ and ‘we always mix business with pleasure’. “It’s about your sole account, joint account and now your business account coming together in one app to give you a fantastic experience,” says Boden. “None of us live separated lives any longer; we don’t come to work and just do work, we don’t go home to do our personal banking. Life’s combined, it’s a balancing act all day long.” No one knows that better than Boden, who sold her house in Swansea to part-fund setting up a new ‘technology bank’ – Starling – in 2014 and has grown it to become the leading digital bank in the UK with 820,000 accounts in all, of which 65,000 are SMEs. “I know all about running a small business, as we were in 2014, and needing the sort of working capital management tools that you didn’t get from your bank. As a small business owner with Starling, you can have all your notifications directly to your phone. “I run my businesses on my smartphone. I use the Starling bank app to tell me when we pay our suppliers. No other bank will offer us that service. So, Starling uses Starling!” Initially aimed at sole traders, freelancers and single director limited companies, Starling is one of a number of challengers to have successfully bid for a share of the
As the boundaries between work and personal life dissolve, so too do those between business and private banking. You need a one-life approach, says Starling Bank Founder & CEO Anne Boden RBS-administered, post-financial crash bailout fund to enhance its business banking offer. Under the scheme, the UK Government insisted that of the $45billion that RBS received to pick it up off the floor in 2008, it would give away £700million to rivals to increase competition for business banking services over which the high street banks had held a monopoly for years. After receiving £100million from the fund in February 2019, Starling is making good on its promise to ‘reshape business banking’ by removing its account holding restrictions on multi-director companies, preparing to offer a euro account, and getting into small business loans as it strives to ‘build the best business account in the market’. There are others that would claim this prize. Established UK-based and exclusively business banking entity, Tide, for example, which recently introduced international bank account numbers (IBANs), using Saxo Bank, to offer crossborder transactions. Monzo, whose founders worked and met at Starling Bank, is now also looking to the SME market, particularly companies transacting crossborder, as is app-based Revolut. German bank N26, a new entrant on the British banking scene, which operates in 24 European countries, is to introduce business accounts for its UK customers soon. Meanwhile, legacy building society Nationwide is also about to open its first business banking facility as part of a £4.1billion digital transformation project, which also offers
SMEs a face-to-face relationship with their bank through its branches. There is no shortage of competitors, but Starling is confident it can match and improve on whatever they offer – even the high street contender, by creating a proxy national branch network using the 11,500 British Post Offices that Starling partnered with in November 2018 to allow customers to deposit and withdraw cash (still an essential banking service for millions of small retailers). And it’s launching a web portal to allow customers to easily switch between their mobile device and a computer to manage their accounts, which is a particular demand of businesses. That’s not to take anything away from Starling’s mobile apps for both iOS and Android phones, which fetched it the Best British Bank and Current Account Provider titles for the second consecutive year, as well as the Best Business Banking Provider title at the British Bank Awards in March this year. But you can’t always run a busy business exclusively from your mobile phone – however much you might want to. The changes it is making demonstrate a listening culture at Starling – the absence of which among traditional providers drove Boden to start the bank in the first place.
The rise of Starling The daughter of a steelworker, Boden studied computer science before going on to build a career among the banking giants, helping to launch the UK’s first same-day payment service, but all the while becoming increasingly frustrated with the status quo. Her ambition in 2014 was to transform banking through technology but starting with a blank sheet. The entire team (there are no departments at Starling) designed an intuitive, one-app-only service giving account holders spending insights, support in reaching savings targets, ease of payment and control over flexible overdrafts, as well as convenient personal finance.
None of us live separated lives any longer; we don’t come to work and just do work, we don’t go home to do our personal banking
Issue 13 | TheFintechMagazine
Fintech Finance presents: The Fintech Magazine Issue 13