Reinventing the Banking Model with Starling Bank

This week in AWS Startup Stories* we talked to Anne Boden, CEO and founder of Starling Bank – the new UK mobile-only current account built from scratch in the AWS Cloud. (If you are curious to learn more about their architecture, check out the latest video part of the series This is My Architecture, where Starling Bank’s CTO Greg Hawkins, talks about managing their privileges for releases on AWS via automation with Slack.)

Having worked at large banking institutions her whole career, Anne Boden felt that she was spending more and more of her time holding back the tide of new technology that looked set to change the banking industry. In an increasingly mobile, as-a-service retail environment, established banking models were fast becoming outdated and Anne saw that as an opportunity. She set about creating a bank more focused on customer freedom and control, and much more like the customer-centric on-demand businesses that have disrupted sectors like music and TV over the past decade. It was in that spirit that she founded Starling Bank back in 2014, and after staged investment over the past three years, Starling has now secured $70 million in capital and launched UK-wide as of Spring 2017.

How it works

Users download the mobile app and can set up their new current account through the app within two minutes (with some valid UK ID). They can then fund their account by transferring money from another bank. Once the user has received their new Starling debit card (delivered within 5 working days of the account going live), they receive notifications each time they use it, and the app’s central ‘Pulse’ screen provides a single view of the account’s balance and their total spend on any given day to help with budgeting. The user also gets control of the kinds of tasks most banks need call centres for – you can lock and unlock your card with one button, and you can change the size of your agreed overdraft limit using a single sliding scale. Spending insights and tools to help users achieve Saving Goals are being introduced in summer 2017.

The app’s central ‘Pulse’ screen provides a single view of the account’s balance and their total spend on any given day to help with budgeting.

We spoke to Anne Boden to hear more about the app, and her vision for the banking industry and you can see the full transcript of the interview here.

Anne: Thanks for inviting me here today. After 35 years in the banking and technology industry, I decided to start a bank. So why was that? Well, my background, for starters. I was a computer science grad that started in the banking industry in the early 80s and spent my career going around the world, running technology functions, finance functions, and I got to a situation where I realised that banking was broken; the models were broken, and it is possible to build things in the Fintech world. For just a few thousands pounds, you could achieve the same results as something that would take perhaps tens of millions in a big bank. And it was following time spent in fintech that I decided to quit my job and start the adventure of starting a new bank.

Darren: Can you give us a bit of insight into how did you think about making the shift from a big company, big enterprise person to being a startup founder?

Anne: I had to do it. Basically, I came to the conclusion that it is possible to do things in the new world, with new sort of technologies that had been never before possible in the old enterprise world. I’d gone through periods of outsourcing and transforming and cost-cutting. I’d been through every single era of the enterprise CIO’s, CTO’s journey. I came to the conclusion that whilst I was focusing on repairing the financial system post-crisis, technology had dramatically changed. There were things that were not possible that nobody could do before. You could actually use lots of services, slot them together in an interesting way, and, above all, the regulator now encouraged it. The regulator now encouraged innovation, and I had to take the opportunity of making it happen.
Darren: Can you tell us about what really differentiates Starling Bank – what is it, from a product and a technology perspective, that makes your company different?

Anne: I spent a lot of my career defending an old banking model. It’s like holding back the tide. Old banks sell one product – usually started with the current account – and cross-sell and up-sell (and perhaps even mis-sell) another product. That was not defensible. Things had moved on. People were making decisions in a whole new world way, all over the world. People were shopping differently with Amazon. People were buying their music differently, but they were still doing their banking in an old-fashioned way. So what was the world going to change? I felt that a model where a customer is captured and then sold lots and lots of other products and didn’t have a choice, well, it was too old-fashioned.

Things had moved on. I saw a world where a company would do one thing really, really well and focus on what it’s really good at. Then live in a marketplace with other products being provided that will produce the whole suite of financial services that a customer would enjoy. I’m not arrogant enough to think that I can be the best provider, or the best mortgage, the best long-term saving product. We’ll do the best checking account in the world, and we’ll link into payment systems. We’ll build our own technology stack, and we’ll deliver that alongside other products, provided by other vendors on their balance sheets, so we can give the customer the best possible solution.

Darren: When you developed the Starling Bank idea and decided to bring it to market, what was the resistance that you received, and how did you go about understanding that resistance in planning to engage appropriately to resolve any of the regulatory concerns?

Anne: Starting a bank is not for the faint-hearted. It is very, very difficult. Hurdles are very high and quite rightly so. We look after people’s money and money is very, very important; therefore, the regulator insists on top quality services, top quality systems, the best processes, and to ensure the customers’ money is safe because all our balances, well, up to £85,000 are covered by the Financial Services Guarantee Scheme.

So the regulator sets the higher standard and doesn’t actually lower them because you’re a startup. What they do is to help you through the process. When we started this process back in the beginning of 2014 and we went to the regulator and said, “We want to do it on the Cloud because that gives the best option of actually delivering the service quality we need, the resilience we need, at a variable cost.” They all scratched their heads and said, “Wasn’t possible.”

During 2014, 2015, the regulator worked very hard with us to make sure that it was possible, and we’re very proud to now say that we’re a new bank, offering retail current account services in the UK. We’re also the 13th member of the Faster Payment Service in the UK; therefore, we offer services that no other banks, apart from those 13, 14 banks can deliver and we’re in the Cloud.

Darren: Is there any guidance that you’d give a Fintech founder or startup executive that’s interested in, in the same space as you’re in when they’re thinking about approaching a regulator or building a business plan? Any one or two pieces of advice that you think would really help them advance their thinking, specific to the regulator?

Anne: Read the regulations. Don’t read commentary on the regulations, become familiar with them. You know, make them your friend. Those regulations are setting out to actually make things fairer and resilient for customers. And as a startup founder, you should have the same objectives. You care about customers, as well. Those regulations are your friend; read them, enjoy them, and actually have good conversations with the regulators.

There’s an easy way for those Fintechs out there that want to offer banking services, apps to consumers or small businesses. We, at Starling Bank, a couple of weeks ago, launched our Starling Developer Platform. This has a full suite of APIs, to bank accounts, payment APIs, create account APIs, everything you need to set up a banking service to consumers. We are very, very proud that we’re the only bank in the UK to offer those on a full retail bank account. We are the 13th member of Faster Payments, so you can directly connect into faster payments, as well. So we’re very proud of this, and we’re encouraging all these Fintech startups out there to start using them – they’re free.

Darren: Can you help me understand the difference between the Developer Platform and the Marketplace, and how should startups consider those two different opportunities differently when considering working with you?

Anne: In a nutshell: the Marketplace is the shop front – it’s part of the Starling app where we will provide our customers with access to a range of financial products and services, in a very convenient way. They can use their own data to find the best deals for them (rather than being sold to by their bank which is typically the ‘old’ banking model for current accounts). For example, the Marketplace will include loan products, savings products, long-term investing products. Our recently announced partners, Moneybox and TransferWise are just a couple of examples of how that works.

On the other hand, our Developer Platform is the back of house – it’s where everything sits ready to be accessed via Developer APIs. Whether you’re a small startup or a large organisation that wants to use the power of a bank account behind an app or your service, you can do so. Our APIs are free to use. Go ahead and start using them.

You can find out more about both of these from our Marketplace website.

Darren: What steps would you recommend listeners take to become a little more familiar with the Starling Developer Platform and take those initial steps to actually become a part of this fabric that you’re building?

Anne: If you want to start a business, you have to actually have to get stuck in and start doing stuff Please go onto our website, our developer portal, join the Slack channel and start using these things. Engage and get some help from us because we want you to start using these APIs, and start creating wonderful things for your customers.

Darren: You took a little bit of a different approach to funding, rather than going to an angel investor or to a venture capital fund, you took a different approach to getting started. Can you share with our listeners what you did and why you chose to go down that path?

Anne: VCs look to invest in a business that looks like other businesses. They’re at a certain stage. They require so much funding. They look something that’s been done before, and when you’re coming along with something that’s never, ever been done before, a new Fintech Bank that’s built on new technologies. It doesn’t fit into any of the boxes the VCs have seen before. So what I did was to leverage my network. I’m very grateful that I had lots of people who were out there that helped me along the road.

You know, some of the big consultancies helped me, people gave me premises. People loaned me staff, and I will be ever grateful for those people that helped me on the way. But when we spent a couple of years in this phase, we then raised substantial capital from an investor that saw the potential of a new Fintech Bank, based on new technology, with a new business model that had never been done before.

Darren: In larger enterprises, internal meetings can literally suck the life out of a good idea team. Can you share how do you take internal meetings and make them different, make them powerful?

Anne: I think internal meetings and internal presentations can kill a company. The longer you spend preparing presentations for each other, the longer it’s going to take to get something out there to customers for them to see, approve and enhance your ideas, so everything we do at Starling is about customers. Everything we prepare is something that’ll eventually go in front of a real customer. Don’t present to each other internally. Don’t talk about politicking to each other internally. The only thing that matters is that customers really want what Starling delivers, and we take customer feedback, not just feedback from each other.

Darren: There are many research studies saying that the access to the right talent is one of the biggest challenges associated with Fintech innovation and Fintech growth. Can you talk about how do you identify a source and attract the talent that you want to join you in Starling?

Anne: We’re very lucky in Starling. We’re doing something very exciting. We’re quite unique in what we’re doing. We can attract the best talent from all over the world but we hire for strengths. We hire for those people that really have big strengths, that think outside the box, they’re going to actually stretch us and challenge us. Big banks, big organisations are full of people who sit within the boundaries, who are not going to rock the boat. We look for those people that are going be real characters in the organisation that can actually challenge us, that can push us, can actually use their strengths to come up with innovation and ideas that could change the world for our customers one day.

Darren: If you were to give one piece of valuable feedback to a start-up founder or someone considering starting a new business, what would that one piece of valuable feedback be?

Anne: Never give up. My advice to those founders out there that have a great vision, that really want to do something different, is to pursue that vision. Don’t water it down, pursue it. Don’t get put off because the only ideas that would succeed and change this fabric of the world live in at the moment, the ones that are different.
So many people said to me that, “You can’t start a bank. Do something simple.” No. I wanted to create the bank that would change financial services for the better.

You can listen to the Startup Stories podcast with Anne Boden here. And if you’re interested to see what are some of the AWS services that Starling Bank is using, subscribe to the series and download the cheat sheet here.

*What is AWS Startup Stories?

AWS Startup Stories is a business series of podcasts published on the AWS Podcast channel that showcases the success stories of startups running on AWS. Heroes of each business talk about how they overcame challenges and used technology to solve problems, providing tips for companies facing similar issues. Learn more about the series and who’s part of them on the webpage here and never miss an episode by subscribing today!