Starling Bank matures into mainstream lender

Only two years prior, Starling was renowned as a digital banking startup, focused on serving underserved and disgruntled retail customers of the some of the largest lenders in the United Kingdom.

It focused primarily on offering easy-to-use current accounts, overdrafts and money transfers. However, it only managed to register a meagre £115,000 loans on its books, notwithstanding the UK’s huge business lending market.

Starling in 2019 was awarded a £100m grant by the UK’s Capability and Innovation Fund to develop its capabilities to ensure that it can easily serve and lend to businesses. The fund was intended to increase competitiveness in the country’s banking sector.

The availability of this fund allowed the digital lender to turn its fortune around when the Covid-19 pandemic hit and the crisis forced the upsurge of a trend of remote working, and fears of recessions.

During this season, Starling opened its doors to SMEs and that singular course of action saw the bank providing £2.2bn in business loans to over 40,000 customers.

“[Starling] has had a good crisis,” says John Cronin, an analyst at stockbrokers Goodbody. “There were questions around its ability to convert deposit products into loan products, so the pandemic was a huge step forwards in that respect.”