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18 views

Case Study

Uploaded by

Ayon Bhattacharya
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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CASE STUDY: Starling Bank: A marketplace of financial solutions

While many fintechs seek to partner with large banks to gain access to their customers, Starling
is disrupting financial services by building its own platform. Founded in 2014, Starling is a
mobile-based bank, which can be accessed by downloading its app on IOS and Android-based
devices.

Starling’s core product is a current account with features such as: no fees on cash withdrawals
and spending abroad; bill-splitting tools which help customers share the cost of group
expenditures (eg restaurant meals); in-app customer-to-customer transfers; and personal
budgeting tools. Furthermore, the app is serviced by a 24/7 customer support centre.

The Starling platform is hosted on Amazon Web Services (AWS). In this way, Amazon provides
the behind-the-scenes infrastructure that supports the app. By using AWS, Starling has achieved
the back-end scale of a large bank, which gives it the capacity to handle millions of customer
transactions.

Though Starling appears to be a ‘mobile-first’ bank, it is not exclusively digital. In 2018, the
bank announced an agreement with Royal Mail, the UK’s postal service, which allows Starling
customers to deposit cash at its ca 11,500 branches. Given that there are between 7,000 and
8,000 bank branches in the UK, this move effectively gives Starling a branch network that is
larger than all other retail banks combined. Furthermore, the public service ethos of Royal Mail –
a vestige from the time it was state-owned – means that these branches are located in convenient
locations across the country. Thus, it is likely that Starling customers never have to travel too far
in order to deposit cash.

The cash-depositing feature is unlikely to be as important to retail customers as it is for business


customers, especially smaller businesses, who tend to receive a large portion of their revenue in
cash. Thus, the partnership with Royal Mail makes Starling attractive to cash-based business
owners such as trades people, market traders and freelancers. Perhaps then, it is no accident that
Starling also launched a small business account in 2018.

This solution was initially only available to small businesses with one director (ie where the
owner and sole director are the same person, and, very often, also the only employee). However,
in 2019 Starling became the first mobile bank in the UK to offer accounts to businesses with
multiple directors. As part of this solution, Starling provides real-time data integration with
accountancy software packages. Evidently, Starling has been paying close attention to the needs
of industry: according to a 2017 survey of 100 large businesses around the world, integration of
banking data with organizational management systems was a key challenge facing corporate
treasury departments.

That Starling, a small, start-up bank with only a few years on its back, should seek to disrupt the
commercial banking market by offering customers something they have long desired, reflects the
bank’s customer-centric ethos. Indeed, Starling was founded ‘out of a desire to create a new kind
of bank and to make banking more inclusive by putting customer needs first’.

WILP – Fintech In Wealth Management


Arun Kumar Gupta
Clearly, Starling aims to do things differently. This is evident in its expansive ethics policy
which, amongst other things, commits the bank to partnering with institutions ‘who themselves
are committed to operating under ethical and environmental standards equivalent to our own –
including in the fair treatment of customers, employees and other stakeholders’.

Starling’s commitment to fairness and its customer-centric approach appears to be paying off. In
2019, it was named ‘Best British Bank’ in the British Bank Awards. As this award was decided
by a poll of than more than 27,000 customers, it appears that Starling’s approach is striking a
chord with the public.

Part of Starling’s success could be attributed to its marketplace model, which provides customers
with a suite of carefully curated financial solutions from third-party providers. Indeed, the bank
appears to be making the most of APIs to enhance the appeal of its platform: in 2018, founder
and CEO Anne Boden noted that it was ‘time to celebrate a new age of banking – the age of the
API… a traditional paradigm has been recast and unbundled to reflect advances in technology,
culture, demand and practice’.

During 2019, Starling announced the introduction of an insurance provider, and a credit-rating
improvement service to its platform. These have complemented the borrowing and wealth-
management solutions already on its platform, thus expanding the suite of innovative financial
services. What’s more, consumers appear to be taking note: by December 2017, the bank had
more than 40,000 customers; a year later, this figure exceeded 350,000. As a result, Starling’s
holistic approach to banking appears to be paying off. But what will happen once bigger players
start to mimic this model at greater scale – can Starling stay ahead?

Questions

1. What are the strengths and weaknesses in Starling’s business model?


2. Does Starling need physical presence at all?
3. How can Starling prepare for its next phase of growth?
4. Why Bank has tied up with AWS?
5. What other examples you have seen where a fintech has embarked on similar journey?

Links

https://www.starlingbank.com/hht/
https://aws.amazon.com/solutions/case-studies/starling-bank-case-study/
https://go2.digitalrealty.com/rs/087-YZJ-
646/images/Case_Study_Digital_Realty_1806_Starling_Bank.pdf
https://cloud.google.com/customers/starling-bank
https://www.starlingbank.com/blog/business-account-multiple-people-significant-control/

WILP – Fintech In Wealth Management


Arun Kumar Gupta

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