In recent years, traditional U.K. banking institutions have seen their market share upended by agile new startup banks. People-focused and technology-driven, these challenger banks have been converting younger customers by the thousands, with a 2019 CREALOGIX survey showing up to one third of Millennials in the U.K. having two or more accounts with digital-only banks. This share is only set to grow, with 75% of Millennial and Gen Z respondents indicating they were thinking about opening an account with a new digital bank in the next three years.
These market disruptors are well-known to tech-savvy younger customers, serving as an accessible and highly convenient alternative to brick-and-mortar banking. Starling, a market-leading challenger bank, is continuing the growth of the industry, announcing a new round of Series D funding. The new funding, totaling $376 million, is intended to continue the company’s growth - an exciting follow-on to its announcement of a fourth consecutive month of operating profits with a monthly net income of over $2 million.
According to CEO Anne Boden, “While technology is at the heart of everything we do, it’s the means to the end-goal. That goal is giving our customers the bank they tell us that they want and one which puts them in control of their money and their data.”
The upstart bank leads the industry in achieving profitability only a handful of years after its founding, with revenues split between net interest income and gross fees and commissions income. Supported by strong growth in lending volumes driven by its government-backed Bounce Back Loan Scheme and Coronavirus Business Interruption Loan Scheme, the company has continued launching new products and providing extra support in the face of the numerous challenges created by the ongoing pandemic.
Starling is competing against a range of new challenger banks in the U.K. and beyond, winning customers away with features like its ‘Current Account Switch Service’ - a program that helps new customers switch away from their previous bank by streamlining the process of moving. By taking on the bulk of the painful work required to switch accounts, the company reports that it has been winning more customers than any other U.K. bank. Remaining convenience-focused, it plans to utilize the funding to improve and increase its offerings, offering easy to use features and expanded capabilities.