High-flyer: Starling Bank CEO Anne Boden on pushing boundaries

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The starling is a sociable, adaptable, friendly and supportive bird. It also works as part of a team to make something as complex as a murmuration – a shifting, swooping wave of sometimes thousands of birds – look beautifully simple.

It explains why Anne Boden and her team chose the name Starling for the digital bank she established in 2014, but it is also not a bad descriptor of Boden herself – the diminutive Welsh woman with the wide smile who took on the big banks with a customer-focused offering based on 30 years’ close observation of what was wrong with the traditional industry.

We meet over Zoom, but her enthusiasm, warmth, integrity and determination to change things for the better shine through. Our conversation begins with her excitement about opening the Cardiff office (there were already offices in London and Southampton) just before lockdown. “Carol Vorderman [the TV personality] was coming to the opening ceremony, but we had to cancel it,” she says, ruefully.

In February, Starling Bank launched its first TV ad aimed at businesses. It follows the journey of a small business owner sitting in her home office, which takes off, like a helicopter, with the help of the Starling app. As the ‘business’ gains height, it is struck by lightning, and she wrestles with the controls before breaking through the clouds to safety, accompanied by the end line ‘Starling Bank: helping business fly’.

The ad was prescient. Unbelievable though it may seem now, few of us anticipated the bolt from the blue, and associated turbulence, represented by the global pandemic. Starling has kept the implicit promise in its ad: it has lent almost £790m to small and medium-sized businesses (SMEs) under the government-backed Coronavirus Business Interruption Loan Scheme and Bounce Back Loan Scheme.

A career banker (joining Lloyds Bank as a graduate trainee in 1981 and, most recently, chief operating officer for Allied Irish Banks), Boden was determined to put customers front and centre of Starling from the outset. That meant no hidden fees or charges, 24/7 customer service, no – or low – charges on overseas card spending and ATM withdrawals, and features that allow customers to stay in control, such as being able to freeze your card if you lose it.

Starling was already doing well before the current crisis. By the end of its financial year in November 2019, 926,000 retail accounts and 82,000 business and sole-trader accounts had been opened, and the bank held a little more than £1bn on deposit. By August 2020, those account numbers had risen to more than 1.25m and almost 200,000 respectively – plus almost 90,000 euro and US dollar accounts – and Starling held more than £3bn on deposit. Across its range, the bank is adding a new account every 35 seconds, making it the fastest-growing SME bank in Europe.

While competitors have been furloughing or laying off staff, cutting executive pay, closing business lines and setting aside huge sums to cover expected losses, Starling has been hiring, raising money (more than £100m from existing investors this year) and continuing to develop new product lines. What’s the secret of its success?

“We are a very agile organisation,” says Boden, her face breaking into its trademark smile. “We are still very entrepreneurial; we see every challenge as an opportunity. We didn’t go into lockdown and stop, or just carry on with the products we were already working on. We thought very carefully about what our customers needed and responded accordingly. You have to be relevant at any particular point in time.”

Firm foundations

Unlike many banks, Starling has in-house engineering teams and its own core banking software running in the public cloud infrastructure.
Boden has been fascinated by technology since she studied computer science at Swansea University, and was frustrated by how clunky the technology was in the banks she worked in – and how resistant those organisations were to change. “It took a long time to put the things in place that would allow Starling to be the customer-focused bank I wanted it to be, but it’s paid off,” she says. “It meant that, during the crisis, we could dip into our bank of features and pull out the components that we could put together to create a relevant product.”

For example, Starling launched a second debit card attached to the customer’s account for use by trusted friends, family or carers, to help those who were self-isolating to get supplies; and cheque imaging, so customers could pay in cheques from home.

By the time Boden left Allied Irish – when the reputation of banking, rocked by scandals, government bailouts and punitive customer penalties, was at rock bottom – she was “ashamed to be a banker”. Unable to fix a system she perceived as broken, she determined to set up a new bank. But people backed away from her at drinks parties when she told them her plan, and the two years she spent raising money was, she admits, “really tough”. She even sold her house to help fund the launch. “My plan was a bit too audacious and ambitious for people to be interested, to be honest,” she says.

Her fortunes changed when she was approached by billionaire fund manager Harald McPike, who flew her to the Bahamas and spent three days quizzing her about her plans on his yacht. Boden expected to be there for only a few hours, but the trip paid off; she’d hoped to raise £3m, but McPike has invested more than £83m so far.

Starling’s retail customers are slightly older and less metropolitan than those of rivals Monzo and Revolut, and it has a strong SME base – particularly micro-businesses and sole traders. “In lockdown, spending on public transport, city coffees and lunches fell, whereas families around the country carried on doing the supermarket shop and, in time, filling up the car with petrol,” says Boden. Again, targeting such demographics seems like a far-sighted strategy. On the contrary, says Boden; customers chose Starling.

“I don’t think there was a point in time where we decided that particular demographic was our target – nor did we sit down and decide what the brand should look like,” she says. “Our brand and culture emerged, based on what we wanted to do in response to what we believed customers needed, and that was naturally attractive to certain types of people right across the UK.”

The Starling app helps customers manage their cash flow, and track their income and spending, but Boden has said she wants to “push the boundaries” of what customers can do with the app. Does it risk taking customers further or faster than they feel comfortable with?

“Our customers are very techy, irrespective of their age,” she says. “We have customers in their nineties. The world is now run on the smartphone and people are very capable. I don’t think there’s any need whatsoever to hold back. Because we love technology and building things, when our customers ask us to do more – as they do constantly – we can respond. I think companies underestimate customers’ technological abilities.”

Starling knows what its customers want because “they talk to us a lot”, says Boden. “In a typical day, I will get 20 or 30 emails from customers. For example, a customer told me recently that, because she has small hands, she uses a small phone, and on our app display, some of the buttons are too near to each other. So, we can change that.”

Boden has always been visible, believing that, as chief executive of a bank, she should be “accessible” and speak to customers on social media. She is proud of the customer-focused experience she has been at pains to create – and that has won awards, including Best British Bank for a third consecutive year at the British Bank Awards in early March. She herself was made an MBE in June 2018 for services to fintech.

So, the opprobrium the bank attracted from some quarters over the Bounce Back Loans was painful; there was a vicious response on Twitter when it turned down some loan applications and temporarily stopped sole traders opening new accounts because it was overwhelmed by demand.

“Personally, the negative stuff was horrible,” Boden admits. However, it was a very small, but vocal, minority who complained, she says.
The urgency of the need from SMEs meant that Starling had to launch its government-backed lending practically from a standing start. “We were upfront about the fact that we might need to make adjustments as we go,” says Boden. “But you can’t hide. You have to take the good with the bad.”

The government guarantee protects the bank, not the borrower, but the banks will be required to chase the loans before going to the Treasury – which is unlikely to play well with the customers concerned. “I think certain bodies have been encouraging people to take out loans without pointing out that they will have to repay them; this is not free money,” says Boden.

“As a result, I think there will be a backlash against the banking industry, and we are all working with the Treasury to ensure the right support mechanisms are there for customers over the next couple of years, and to figure out what this recovery process is going to be. We have to make sure that those customers are treated fairly.”

Redressing the balance

Boden is also proud of the bank’s record on gender diversity, among both staff and customers: half the executive team and one-third of the board are women. As a woman in two worlds historically dominated by men – finance and technology – gender equality is close to Boden’s heart. Her own experience has taught her that if you don’t ‘fit in’, you have to “really stand out”.

Starling has conducted research that aims to challenge gender stereotypes around financial habits. For example, its #makemoneyequal campaign examined how differently the media speaks to men and women about money.

In June, it published a report on couples’ household finances, in conjunction with The Fawcett Society. It found that, although women are as knowledgeable about finances as men, and increasingly financially independent, they continue to shoulder the burden of labour in the household, with damaging effects on their wellbeing – something that has only been magnified during the current crisis. Starling and The Fawcett Society have called on the government to help redress the balance by making all jobs flexible, as far as practically possible, giving fathers longer parental leave, and protecting women’s pension contributions during maternity leave.

“Diversity is what we are,” says Boden, yet she admits that Starling’s focus has been on gender equality rather than racial equality – and racial inequality has been thrown into sharp relief by the Black Lives Matter (BLM) movement.

“I feel very comfortable being very vocal about gender equality,” she says. “When it comes to racial inequalities, I feel that neither I nor the other leaders here have the right to talk, because we haven’t felt what it is like to be discriminated against in this way.”

It’s a more honest response than that of some businesses, which have raced to express support, apparently blind to the stark inequalities within their own organisations. A voracious reader, Boden is educating herself “by working my way through my reading list”.

Research shows that black people are severely disadvantaged when it comes to raising finance – to start a business, for example. Is this a potential area of research for Starling? “Yes,” says Boden, though she suggests they will take a considered approach.

“The whole BLM issue has been an eye-opener for us and, as an organisation, we are learning. Even here, while our employee base is diverse, we are not getting black people to the top of the organisation.”

You sense she will take the issue very seriously because she has a keen sense of fairness – at work, among customers, and in society as a whole. The atmosphere at Starling is informal and egalitarian, informed, perhaps, by Boden’s own background: her father was a steelworker and her mother worked in a department store.

One of Boden’s proudest achievements this year was awarding free shares, worth around £3,000 per person, to all employees. “They deserve no less,” she wrote in her annual ‘CEO letter’ to staff, customers and investors in August. Boden, employees and ex-employees – and an employee benefits trust – now own 24% of the business.

In August, Starling Bank came just behind Monzo at the top of the biannual customer satisfaction poll by Ipsos Mori on behalf of the Competition and Markets Authority. The survey, of nearly 20,000 retail customers of 19 participating banks, ranked the bank a close second in terms of overall service quality – ahead of long-time customer hero First Direct. Starling took pole position, however, in overdraft services.

“It’s been the most wonderful journey so far, with lots of ups and downs, and some horrific times, but it is very rewarding,” says Boden. “Not many people get the opportunity to reinvent something. I spent a lot of time working out what was wrong with the industry, and this is my opportunity to do it right. But it’s a work in progress.”

She believes that the pandemic has accelerated people’s changing expectations of business – they want them to be more responsive and responsible and, at least until we get a vaccine, more digital. “We can be in the vanguard of that, which is exciting,” she says, but warns against complacency. “When businesses take their eye off the ball, things go wrong. We have to keep listening carefully to our customers to make sure we continue to evolve.”

Starling expects to break even this year and is pursuing international ambitions. It is negotiating for a licence in Ireland, from where it hopes to launch a European operation early next year. Competitors should watch out: another feature of the starling is that it arrives in large numbers in each new territory and displaces the old guard.

Boden credits the whole UK banking industry with working very hard to “do what the chancellor asked us to do and get money into the hands of businesses to help them through this crisis”. Six years ago, she was ashamed to be banker. How does she feel now? She grins: “I’m very, very proud to be a banker today.”

This article was first published in the October 2020 issue of Impact.