Anne Boden, CEO Letter
This is my very last Starling CEO letter. By now, you’ll probably be aware that I am stepping aside as CEO, although I will remain on the Board of directors. For those of you that know me you have already guessed that this is not just going to be a list of achievements, but also a glimpse of how we got here and what is to come.
Before we start, let’s take a quick stock-take of where we are:
- In the space of six years, we’ve changed the face of banking across the industry, introducing innovations in the Starling app, from Spending Insights to Bills Manager and the Card Lock feature, that have been widely copied across the industry and some that have not (yet) been adopted by others, such as free Virtual Cards.
- We’ve built a robust asset strategy on the foundation of a low risk portfolio.
- We’ve launched a ground-breaking cloud-native Software as a Service subsidiary, Engine, that’s poised to take on the world and spearhead our global expansion.
The Road to Iconic
Starling is now one of the most high-potential companies in the UK. This is because we are a leader in a large mainstream market. We have achieved what many investors call product-market fit, in a deep market and are already in our second year of profitability. As we scale towards becoming one of the largest players in the market, we will further delight our customers and produce higher returns. Or more crudely, we have a lot of runway to become even more successful as this highly leverageable business model scales.
What does it take for a company to be not just high potential but also world-leading? It needs a brand and it needs to be internationally relevant. It also needs to deliver something special. During the year I was pleased to learn that Starling scored just above Lego in YouGov’s 2022 Recommended Ratings list. And doesn’t everyone love Lego! Starling is not just a recognised brand, but the brand attracts and delights the customers it is built to serve.
I believe the best businesses are committed to pursuing the social good. At Starling we are constantly homing in on what makes us such an essential part of our customers' lives, resulting in us being more efficient and making our customers more efficient in managing their everyday money. We are working hard each day to become a better fit for our customers; I suppose we will fit together as Lego bricks.
Looking deeper at the business model
Our business model has always looked a bit different from other banks’. We started from customer needs and worked back from there. We knew that building the very best current account would be challenging, but if we could also provide this world-beating product for free then that would undoubtedly be a winner. It was and still is.
If we could go on to deliver such an account to customers in a large market, then the current account balances could be invested in various ways to return profits which banking professionals call the asset side of the balance sheet.
The balance sheet side of the business at Starling comprises personal lending, SME lending, mortgages and securities. The majority of these assets are considered by the Bank of England as High Quality Liquid Assets, which means that they are able to meet short-term liquidity needs. All this adds up to making Starling a very safe, stable and profitable bank.
Serving more customers
The magic of Starling is not just the brand, but also our technology. When we set out to build Starling, we decided that it was only possible with technology crafted by our own engineers so that we could solve big problems that had been shied away from by big bank tech.
While millions of customers in the UK are benefiting from Starling, billions of customers around the world are not. Yet, while we believe technology is global, customers and country regulators are not. We therefore believe the best way to enter these markets is by providing a Software as a Service (SaaS) solution to banks around the world through our subsidiary Engine.
I must admit that it has been a fun year visiting some of the companies that are now only months and not years later beavering away on the implementation. I also believe that there are rumours that Sam Everington, CEO of Engine, has been seen surfing on Bondi Beach, Sydney. I am looking forward to lots of visits around the world to meet up with our customers.
We play an important part in people’s lives
I have enjoyed every minute of the journey to date and, while some aspects of the job cause much more anguish than others, the joy comes from spending time with the wonderful people who work every day for Starling and our customers.
Returning to the anguish, I will never harden to the news of the financial distress caused to victims of financial fraud, including some of the most vulnerable in society, and I will never not be angry at the scammers and fraudsters who take advantage of them. It is this that differentiates us at Starling, our people care and believe that a bank needs to strive to play its part in society. We do not always succeed at that and often unintended consequences frustrate our efforts, but it is what we are all about.
Our aim is that one day everyone in the world will have the tools to understand money and take control of their finances, regardless of their age, race, gender, identity or background. We believe that technology can help achieve this. But money is emotional and complicated and sometimes messy. So to help us on this path we are guided by our five corporate values.
Listen: We listen to each other and to the outside world. Above all, we listen to our customers. A lot of our app features exist because customers asked for them or because we had our ear to the ground and figured out what people need, often before they did.
Keep it simple: Starling is a complex machine, but we strive to keep our user experience, our language and ways of working simple.
Do the right thing: This means being fair and transparent, building a progressive, inclusive internal culture that champions equity and making thoughtful, sustainable choices. It also means constantly asking ourselves: are we really doing the right thing here?
Own it: We’re a diverse bunch, who are not afraid to get our hands dirty. We give smart, curious minds the autonomy to explore. We are hungry to learn. We try things and take risks, even if it means we might fail.
Aim for greatness: We want everything we make to be better than anything that came before it: more elegant and beautiful; more useful and innovative. And it has to do its job better than anyone else does.
I feel confident that our people understand this vision and are committed to living and breathing it. Someone once said to me that you can touch the culture at Starling, you can feel it.
Our regular employee surveys provide a great pulse check on the company. They show that employee satisfaction at Starling consistently scores above the average, not only for the financial services sector (maybe that’s a low bar), but also for all UK employers. It’s the equivalent of being stopped at work by a colleague who says “Hi, I’m your manager, how am I doing?”, the only difference being that it is done online, anonymously and regularly.
From this, we have learned that we are not always quite as good as we imagine at certain things and equally that there are things, great things, that we take for granted that are, in fact, quite unique to us. Take the way we run our Customer Service operations: we don’t manage through strict KPIs, there are no average handling times for calls, we don’t schedule breaks and colleagues manage their shifts and do shift swaps between themselves.
The numbers and financials
Moving on to our future, Starling has a proven business model. One that works. We are not in the position of many new banks or fintechs hoping that profitability will be around the corner. As you can see from our results, published today.
For the financial year ending 31 March 2023, we recorded a pre-tax profit of £195 million, a sixfold increase from last year’s figure of £32 million. Revenue more than doubled to £453 million, from £216 million a year earlier.
With a solid asset strategy and strong customer engagement, we are now a leading bank in the UK, holding £10.6 billion in deposits and supporting more than 3.6 million customers. We employ 2,700 across offices in London, Southampton, Dublin, Cardiff and, our most recent location, Manchester, where new employees are already hard at work even though the new office there is still being refitted (hello Manchester!).
Success has not slowed us down. If anything it has added to the sense of urgency that has always driven our innovation. So too has the cost of living crisis. This year, as always, we’ve responded quickly to evolving consumer needs, for example with our bills manager and virtual cards features, to help people stay on top of their finances, and also with our Fixed Term Saver.
And the future
I am incredibly proud of the organisation that we have built, the part we play in society and above all the people that make Starling what it is today. Whether that is crafting the finest technology, supporting our customers or keeping you safe with some of the finest security features - these are the people who make us what we are.
I am delighted the Board has selected John Mountain to take over as Interim CEO. John joined me on this journey in 2015 and is now Chief Operating Officer. He understands what makes us successful and what it takes to lead Starling.
All for now. I will be popping up now and then with my perspectives on banking, technology and, of course, Starling. Wherever digital technology is creating new, safer and stable ways of managing money, you can expect me to be there.