Supporting the accidental entrepreneurs and tackling fraud

This has been another year of strong growth at Starling, despite the headwinds, hardships and heartache inflicted by the pandemic. In the last 12 months we’ve grown our account numbers from one to two million, expanded our loan book to more than £1.9 billion and seen our deposit base grow from £1 billion to £4.8 billion.

As the pandemic and associated lockdowns accelerated the shift to digital in 2020, we took our employee headcount past 1,000, raised £100 million more in funding and became profitable on a monthly basis, passing breakeven point in October.

We remain one of just four banks to be designated a Which? ‘recommended provider’ and we topped the Which? tables for customer satisfaction.

Innovation

The pandemic did nothing to slow down innovation at Starling. In fact, it spurred us on, as we developed products and services to help our customers navigate a new world. These included our Connected card, to help people who are sheltering to buy supplies, and cheque imaging as well as government-backed lending for small businesses. Under the Bounce Back Loan and Coronavirus Business Interruption Loan Schemes, we’ve lent to 45,000 small businesses.

Our new paid-for Business Toolkit (with bookkeeping tools including invoice creation, bill management, automatic categorisation of expenses, sole trader tax estimation, VAT recording and submission) and US dollar accounts for limited companies, were also launched in 2020. These new products demonstrate our dedication to helping small businesses and a drive by Starling for more subscription-based services.

In 2020 we also launched 12 new Marketplace integrations for our business customers, including Slack and iZettle. Our Marketplace now offers 32 services and ever deeper integrations.

New ways of working

My reaction to the first Coronavirus lockdown last Spring surprised me. I’d always prided myself on being the first into the office and the last to leave. Yet, oddly, I have enjoyed the challenge of remote working. I adapted, learned an entirely new way of working and began to wonder if I would ever fully go back to my former ways again.

For many of us, remote working has humanised the workplace. We’ve met our colleagues’ children and pets, their flatmates and partners, and had a glimpse into their homes. True, it can be harder to read social cues on video calls and easy to get distracted by all those open tabs on our screens. On the plus side video calling is also an equalizer: all those boxes are the same size on Zoom and nobody is at the head of the table.

Like the rest of the business world we’re still figuring out the long term implications of all this. But it seems unlikely that we will ever go back to full-time office-based work for all staff all the time.

Tackling fraud is everybody’s business

I’m one of the fortunate ones; I have a fast-growing bank to keep me occupied. But I’m concerned about fraudsters who have adapted to the new climate and are exploiting the vulnerability of those spending more time at home.

Common scams might begin with an email, text, or call from a fraudster claiming to be from the customer’s bank with a stark and terrifying message: your account has been compromised, move your money elsewhere. In reality, the only compromise on the account is the attempt by the caller to empty it.

I’ve heard heart-breaking stories about customers from Starling and elsewhere who’ve succumbed to these scams. We’ve worked hard to protect customers, including placing a series of highly prominent and explicit warnings, such as ‘this is a scam’, in the app. And we’re adding to our security measures all the time.

My strongest advice is this: if something does not seem right, or you feel under pressure to move money somewhere unfamiliar, don’t keep blindly clicking through warning messages without reading them. Banks will never call you to tell you to move your money to a ‘safe’ account. There is no such concept as a safe account; if someone uses the phrase then they are a fraudster. Hang up, or don’t engage with online messages. Then contact the bank immediately. With Starling use the contact number in the app, or the in-app chat.

I’m disappointed the government decided not to include online fraud in its Online Harms Bill and I hope it’s not too late to change this. Banks invest billions to tackle economic crime, but we cannot stop it on our own. We need the cooperation of other industries, particularly the social media platforms and telecoms networks that are abused by criminals for the express purposes of financial crime.

According to our industry body, UK Finance, there are thousands of social-media accounts in operation by criminals at any one time, the majority being openly advertised and visible to users. Very often these accounts are used for advertising for ‘money mules’ (for the purposes of money laundering), selling stolen identity and credit-card data, phishing, bogus investment scams and impersonation fraud as outlined above.

In this context, banks seem to have become the underwriter of all kinds of fraud that are not really financial fraud at all. If a consumer buys a pair of trainers online from a site advertised on a social media platform that takes their money and runs, this is not financial fraud, it’s purchase fraud. Yet the banks are the ones asked to repay the customer for the non-existent trainers, while the social media platforms the fraudsters advertise on do nothing. Criminals wouldn’t be allowed to advertise on traditional media with such impunity.

UK Finance figures show that 57% of scam cases relate to purchase fraud, with 45% of the cases being for sums below £300. We fully support the Contingent Reimbursement Model code that we signed up to last year to help customers hit by scams. But this kind of scam is not what the code was intended for.

I’m reminded of the comment often attributed to the infamous American bank robber ‘Slick’ Willie Sutton when asked by a reporter why he robbed banks: “Because that’s where the money is.” Crime has gone digital as our whole lives have gone digital. If we shop, work, communicate and entertain ourselves online, crime is bound to shift online too. And if we’re serious about tackling all kinds of financial and economic fraud and at the same time protecting customers, we need a cross-industry approach and we need better law enforcement to stop the organised gangs behind it. Banks cannot do this on their own.

Accidental entrepreneurs

Businesses were set up at a record rate in 2020, according to data from Companies House. Their founders included a new breed of accidental entrepreneur, forced by circumstance during the pandemic to find new ways to earn money.

Becoming self-employed was something many could never have imagined less than a year earlier. We wish them all the best for 2021 and to help them on their way we’ve dedicated a section of our website, called Flying Lessons, to a series of ‘how to’ content to help them lift off. We also publish business customer case studies to inspire others.

Starling Bank is doing its bit to support this new wave of entrepreneurs along with the more established business, that make up our 300,000 SME accounts. We remained open for new business accounts throughout the whole of 2020, although we did suspend the opening of new sole trader accounts for a few weeks in the middle of the year to help manage high demand.

I recounted my own journey as founder of Starling in my book, Banking on It, published in November. As an entrepreneur, I have for years leaned heavily for inspiration and support on books by other business owners to guide me. I hope, in turn, that others will find my story of interest.

What we’ve learned

The pandemic has caused immeasurable human suffering, but if I feel a sense of optimism it’s because the lessons we’ve all learnt and the tools we’ve built in the last nine months have equipped us to better address future shocks and to make the most of any recovery.

I would like to thank, once again, those on the front line in the NHS and other essential jobs and also the scientists and volunteers who, in record time, developed the vaccines that will enable us to resume something resembling our former lives. I will be there, my sleeve rolled up, ready for my jab when my turn comes.

I would also like to thank our customers and our staff. Here’s hoping for a better 2021.

Anne