Starling has hit the 1 million account milestone, placing it among the three most successful UK neobanks
via Business Insider
UK neobank Starling has achieved the 1 million account mark, Starling’s founder and CEO Anne Boden confirmed to Yahoo Finance UK. The milestone places Starling among the three most successful neobanks in the UK — trailing Revolut’s 8 million customers and Monzo’s 3.3 million.
Additionally, the neobank has placed a great deal of focus on expanding services for business clients, and Boden noted that Starling counts 80,000 companies among its customers. The news comes after the neobank raised £30 million ($39 million) of funding last month.
While Starling’s total number of accounts may trail other big players in the UK, it could have an edge over competitors due to the sustainability of its growth. While achieving massive scale is admirable, profitability is a problem that almost all neobanks face. But Starling views sustainability as an important growth metric and has ambitions of solving the profitability problem in the near future: Boden expects that Starling will reach its break-even point in 2020 and will be able to achieve profitability within the next two years from now.
In particular, two factors set Starling apart and could contribute to its profit potential:
- The neobank claims its average deposits are higher than other challenger banks. Starling’s last publicly disclosed deposit total was £800 million, but Boden said she expects it to reach £1 billion ($1.29 billion) in the coming weeks. If it manages to do so and it has 1 million customers, its average deposits per account can be estimated to be around £1,000 ($1,287). While this can be difficult to compare with other specific neobanks, this estimate is significantly higher than the average deposit balance for UK neobanks overall of £350 ($451) estimated by Accenture.
- Starling places a heavy emphasis on serving business clients. Starling offers a marketplace that essentially acts as an app store for financial products for businesses, offering access to a variety of third-party services, and it has expanded the tools available several times in the last few months. It has also been adding more flexibility to its own banking offerings for businesses, introducing a new dual-currency debit card and business euro account as well as a web portal to give businesses another way to manage their accounts. These moves can help Starling attract SMB clients, which can be high-value: UK-based neobank OakNorth, which focuses on SMBs, became profitable during its first year operating, for instance.