Anne Boden: Starling can overtake Barclays in 5 years

When it comes to what customers think of neobanks compared with incumbents, the numbers are clear. They love them. But the proportion of the market held by the likes of Monzo and Starling is still relatively low after five years of digital disruptions compared to the centuries-old high street bank names such as Barclays.

That could be about to change, according to Anne Boden, founder and CEO of Starling Bank.

Boden told the PA news agency yesterday that within five years Starling could overtake Barclays, for example, in the business banking market. In fact, it's a business goal.

Five years, she said, was a “very realistic” period over which it could double its share of business banking in the UK. It currently holds 7 per cent. Barclays has 15 per cent.

Boden's comments echo what she wrote in the new chapter of her book, Banking On It, that "at the rate of growth Starling is now experiencing, overtaking them [Barclays] is not just doable, it is a strong possibility.”

Starling launched its business accounts just three years ago.

“In a market with almost no meaningful competition, entrepreneurs and small business owners have for too long been marginalised and taken advantage of by big banks,” said Boden said at the time.

Since then, Monzo and Revolut as well as specialist digital SME-only banks like Tide, Coconut and Allica have launched business accounts and/or won banking licenses. 

Starling, however, has been a breakout success in the category.

On the eve of the pandemic, it had just over 100,000 business banking customers after launching its SME lending business for loans up to £250,000.

It then became an early provider of Bounce Back Loans during 2020. In total it lent more than £1.58bn to over 53,000 limited companies and sole traders via the government-backed package at the last count. In total, the bank said in July it had lent £2.18bn to SMEs.

By the end of 2020, it had nearly 3 per cent of the market for SME banking, rising by more than 100 per cent today. While that growth rate will be hard to maintain over the long term, the bank has big ambitions. 

Starling’s CFO Declan Ferguson said in July that it was expecting to have... "double-digit market share within the next 18 months.” Meaning it would be closing in on the likes of Barclays by the end of 2022.