Exclusive: Starling Bank’s Marketplace hits third anniversary amid new “quality over quantity” strategy

Three years after Starling Bank launched its third-party Marketplace, the team is shifting its strategy and exploring new business models, AltFi can exclusively reveal.

Starling launched its Marketplace on 12 September 2017, becoming the first digital bank to debut a comprehensive third-party offering with day one integrations from fintechs like Flux and MoneyBox.

Marketplace initially let consumers to share their financial data between these apps and services, becoming one of the first mainstream examples of Open Banking.

In the years since, has Marketplace undergone a series of changes, both in strategy and leadership, before becoming the responsibility of Anna Mitchell in May 2019.

Mitchell joined Starling as product lead last February—coincidentally the same week that the bank would be awarded £100m from Banking Competition Remedies as part of a grant which would “heavily influence” its Marketplace strategy.

She quickly picked up Marketplace responsibilities reporting directly to Starling’s chief banking officer Helen Bierton—a role which had been juggled between execs since the departure of Megan Caywood as chief platform officer in December 2018.

According to Mitchell the bank’s "punchy target" to add a dozen business banking Marketplace providers by last Christmas, and a further 39 by 2023, led to a heavy focus on the overall quantity of business banking providers above all else. 

Marketplace now has 27 providers listed across its business and consumer banking, with 1 in 3 Starling business customers having connected a third-party provider to their account.

Today Mitchell says Starling’s thinking is "evolving from where we were with the BCR bid,” adding that the plan today is “fewer integrations, but slightly richer integrations.”

“Right now the data and value from customers suggests that a few quality select integrations are actually far more valuable.”

"Helen and myself are a lot clearer on what works, and what doesn't," she adds.

Despite the shifts, what’s clear talking to Mitchell is that the bank remains as committed as ever to the fundamental vision of the Marketplace launched in 2017.

"What is still as true today as it would have been on day one is the fact that, at Starling, we firmly believe that quality integrations with third-party products can enhance our proposition."

A paid-for model?

A far more significant evolution of Marketplace could be on the cards however, with Mitchell’s team actively exploring new revenue generating opportunities through their third-party integrations.

In the last few weeks we’ve seen Starling preparing to launch a host of paid consumer offerings including Starling Kite and developments to its Connected Card, along with the debut of the bank’s premium Business Toolkit.

"Unsurprisingly I think you'll see a similar approach coming out in the Marketplace and what we're doing with third party integrations," says Mitchell.

“While I don't think revenue is ever going to be paramount for the Marketplace, what we're doing with our integrations is more around customer stickiness... we're increasingly keen to experiment with alternatives.”

Mitchell added that these experiments are “for people who want to pay extra” and would be coming “in the next few months”.

Today Marketplace is already a source of revenue for Starling, earning commission for every customer that signs up for a third-party product, and commission which has grown some 90 per cent over the past 12 months.

And, while its rival Monzo came under fire last year for third-party integrations with OakNorth and others landing customers with worse interest rates than if they’d gone direct, Mitchell says Starling would never do the same and had enshrined the belief in a so-called ‘Starling Promise’.

“Last year we formally agreed, and it’s in all our contracts with Marketplace services, that we believe that a customer should not be penalised financially for having accessed a product through our Marketplace,” says Mitchell.

Three years on, Starling Marketplace is bigger and better than ever, with a new focus on quality, refinement and deeper integrations, the next three years look poised to be its most interesting yet.