London fintech Starling is playing the long game. Here's why its CEO shunned VC money and how she's ramping up expansion plans.
- UK challenger bank Starling Bank is closing in on a million customers and just named two new hires as it looks to fix the "broken" banking system.
CEO Anne Boden, who founded the bank in 2014, is closing in on a million customers and will soon be leading its offensive on Europe with two hires to push that initiative.
- "My background is in banking so I knew how to found a bank," she told Business Insider in an interview. "The entire system was broken post financial crisis and I wanted to put it right."
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Europe has seen a bevy of challenger banks come to prominence in recent years - including unicorns Revolut, Monzo, and N26. London's Starling, while older yet yet with fewer customers than those rivals, says it's fast catching up.
CEO Anne Boden, who founded the bank in 2014, is closing in on a million customers and will soon be leading its offensive on Europe with two hires to push that initiative.
Business Insider can reveal that Starling has hired Felim O'Donnell from Allied Irish Banks (AIB) and Elaine Deehan, a fintech expert and founder of pocketwire, a mobile banking app, to head up its international expansion.
The firm has taken its time establishing itself compared to its faster-growing peers. That's how Boden prefers it.
One of fintech's few female founders, says she spent two years gaining support to get funding.
That came in the form of a $48 million Series A from investor Harald McPike, founder of QuantRes, a London-based quant fund and private investor, and Starling has never looked back since. Boden has raised a total of $233 million in five years, from McPike and private fund Merian, but hasn't yet included venture capital in Starling's funding.
"We missed out the VC stage because our original funding was from a family office, and this was sufficient until we were big enough to command the attention of institutional investors, such as Merian," Boden told Business Insider in an interview. "VCs traditionally take bigger bets and are willing to tolerate more risk in their portfolio in the hope of having a 20x return on just one investment."
Rather than focusing on exponential growth in revenues and customer numbers, institutionals can often afford to be more patient and invest in more mature companies. "VCs seek moonshot businesses that have a 1/10 chance of being the next Facebook; funds want more certainty," Boden said.
The bank is a mobile banking platform which operates both current accounts and business banking.
"We appeal to funds that set more demanding customer economics criteria because we can fit their fund objectives," she added. Starling declined to share the firm's valuation.
Expansion on the horizon
The bank is in discussions about applying for an Irish banking license to operate in the EU, Brexit notwithstanding, and will push its product onto the continent in the coming months.
Building operations in new locations is nothing new for Boden, who unlike many of the other fintech challengers, has an extensive and varied background in banking. Boden has previously worked at Royal Bank of Scotland, ABN Amro, UBS, Standard Chartered, Lloyds, and then Allied Irish Banks where her spark to start Starling came from.
"My background is in banking so I knew how to found a bank," Boden said. She said she wanted to rebuild trust in the industry. "The entire system was broken post financial crisis, and I wanted to put it right."
Boden turned down the opportunity to work at Microsoft in order to become COO at AIB but soon realised she would need to take matters into her own hands to try and fix a system which had lost its gloss post-financial crisis.
"I realised that even if i revolutionised things there to the optimum amount, then it wasn't going to move the dial," she added.
As a result Boden has approached the banking industry in a procedural manner, taking institutional funding and building Starling's product from scratch with a self-described focus on the customer and the bank's relationship with them.