Joining the latest episode of the UKTN Podcast is Anne Boden, founder and CEO of Starling Bank. During the show, Boden talks about being the “odd one out” in the world of finance, how VCs are overlooking female founders and why crypto is “lacking sufficient practical and moral purpose”.
Boden founded Starling in 2014 after decades of working for some of the world’s largest banks. Starling, which is an online-only bank, provides both business and current accounts. The unicorn fintech company has been profitable since 2021 and has 3.5 million customers, 500,000 of which are business accounts.
In the latest in a series of conversations with founders of high-growth UK tech companies, Boden tells UKTN Podcast host Jane Wakefield about Starling’s hiring plans across the UK, whether it needs to raise any more funding, and why she’s keen to tackle late payments for small businesses.
Listen to the full episode here, along with all previous episodes of the UKTN Podcast.
A full transcript of the episode, which has been lightly edited for clarity, is available below.
UKTN Podcast with Starling Bank founder Anne Boden
Jane Wakefield: Joining me today is Anne Boden, the founder and CEO of digital bank Starling. Thanks for joining me Anne.
Anne Boden: Hi, Jane.
JW: First of all, let me just ask a little bit about you and how you came to be in this current role at Starling Bank?
Anne Boden: Well, I’m a computer science graduate from the early 1980s that spent her whole career in corporate jobs in technology in the big banks. I’ve worked for banks all over the world, in a 35-year career in traditional technology banking. And in 2014, I quit my job to start a new bank, and then I became an entrepreneur. So there’s quite a long history of lots of banks doing huge projects, running budgets of billions in lots of banks across the world. And then I realised things could be done better, and I was going to start my own bank.
JW: And what were some of the things that you were finding frustrating in the way that traditional banks were doing things that you wanted to change?
AB: I think that when I started in technology in the early 1980s, the technologists and the business were very close together, working together to solve real problems. And over a 30-year career in Lloyds Bank, Standard Chartered Bank, PwC, UBS in Zurich, ABN Amro in Amsterdam, I came to the conclusion that the separation between the people who actually made things happen, and the people who thought they knew what the so-called business customers wanted, had grown apart. And more and more time was being spent in bureaucracy, in planning, in controlling, in minimising risk, but not enough was being spent in really driving the business forward.
And I felt that despite the fact there were lots of departments talking about innovation, hardly any innovation was actually being done. And I toured the world talking to banks all over the world, talking about what they were doing. And I talked to the CEO, and he tells me about the fact that he’s refurbishing all these banking branches. And I talked to the CFO when they talk about the cost of everything. And then I actually went out there and experienced it. And the only thing different from bank to bank was the colour of the carpet in the branches, there was nothing really fundamentally different. So I started thinking about and dreaming about, what would it be like, if you had a new bank that did things in a new, different way. I also started thinking about what I wanted to do next. And at the time, I was chief operating officer at Allied Irish Banks in Dublin. And I’d gone in there to return the bank to profitability. And then I came to the conclusion in December 2013 that we needed a new bank, and I was going to be the founder of that bank.
JW: And now we’ve got quite a lot of these banks that are digital only. How have you found that transition into that way of doing things? And how do you find the fact that you’ve now got plenty of competition?
AB: Well there isn’t a lot of competition, I think there are a lot of new players trying to innovate and create value for customers, there are very few – I think there’s two – new digital banks with a banking licence, providing digital services, digital current accounts to customers. So we are now many years into our development, we’ve now got three and a half million customers, half a million of those customers are business customers. And we rank as the number one customer service bank by the Competition and Markets Authority. So yes, it’s been, you know, it’s been nine years for me, but we’ve managed to deliver what we set out to do.
When I started this, I took a long time to raise money, it was a very, very difficult process. I started knocking on doors and saying this is the idea, I’m going to start a new bank with a new customer proposition it’s going to have current accounts that are going to be free to consumers and businesses, it’s going to give wonderful service, and it’s going to be profitable, and we’re going to be bigger than the big banks. And guess what, nobody believed me. It’s a bit of an audacious plan, but that is what we’re doing. Our customers are joining us because of the service, and because we are there 24 by seven for customers,
JW: And what would you say are some of the key things that you learned about running a business, when you went out looking for that funding?
AB: I think that the venture capital world is still dominated by a certain sector of society. I was a 54-year-old, Welsh woman, five foot tall, that was knocking on doors saying, I could take on the big banks, and I was gonna do it using technology. And venture capitalists didn’t believe me. Venture capitalists really look for patterns. Venture capital investment is all about looking for businesses that look like previous businesses, with founders that look familiar. And I wasn’t a 30-year-old, sort of white guy with a beard and I had spent my career in corporate life. And therefore I was a very unusual founder. And I suppose my aspiration, my vision, was to take on big financial institutions. And nobody thought that was possible.
JW: Obviously, you proved them wrong. Are you now seeing that traditional banks are becoming more aware of the threat of banks like Starling and changing the way they are doing things? Or are they still sticking with the traditional methods?
AB: I think it’s very difficult for them to change their methods. And I think they’re taking new ways of doing things very seriously. It’s not just Starling, it’s the tech companies around the world that are challenging the way technology is delivered. And the big banks around the world are sitting up and taking notice and trying to figure out how they can catch up. Yes, they copy all our features. And that’s great. Every time I drive down a motorway or a main road and see a billboard at the side of the road, being advert from one of the big banks, advertising a feature we launched five years ago. You know, that gives me a bit of a buzz. As well as changing the experience for our customers, we’re changing the experience for all customers. And they are taking it really seriously.
One of the things we launched about six months ago, is Engine by Starling. One of the things about Starling is we built all our technology from scratch, we didn’t go out and buy software packages. Starling technology, everything that actually runs the bank, has been built by Starling engineers. We are now offering that technology platform as a SaaS service to other banks around the world. So a couple of months ago, I was in Australia, meeting banks in Australia, I’ve been to the states. Starling’s product now is also to provide technology to other banks around the world.
JW: Before we talk about that, and we will come back to Engine a bit later, you mentioned that you were a science graduate in the 80s, which I guess was fairly unusual. And you’ve mentioned that you didn’t necessarily fit with the model of what people were expecting from entrepreneurs. So how have you found being a woman in what is a very male-dominated world of tech and fintech I should imagine even more so?
AB: I’m used to being the odd one out. I was the odd one out doing chemistry and computer science at university. I was the odd one out starting a technology career in the city. I was an old one out as a woman in finance. So when I became an entrepreneur, that was pretty unusual as well. So being the only one out around the table is something I’m used to. And I think it teaches you perseverance. I think it teaches you resilience. Throughout my career, I’ve had to push for every promotion and every job. It was good training for raising money.
JW: Do you think that that’s changing now? Are you seeing more women coming through? What would your advice be to young women that are thinking of getting into the tech world?
AB: I don’t think it’s getting… in the tech world I don’t think it is getting any better. When I started 30-odd years ago, it was difficult and it’s still difficult. I don’t think we’ve made the strides, the improvements, I thought we would make when I started my career. Just because things are difficult doesn’t mean we should give up. I believe that the more we do, the more we talk about it, the more we encourage, the more we have role models, the better it gets. But it’s still difficult. And there are many, many women who are not being promoted, who are not be in funded, whilst average men are being promoted and being funded.
JW: Let’s talk a little bit more now about Starling. And I guess the glaringly obvious first question is about the backdrop to banking at the moment, which is the economic downturn that we’re facing. And Starling has said it wants to be a bank for small to medium size businesses. Lots of those small businesses face incredibly tough times having had many years of tough times because of the pandemic. How are you seeing the situation play out with your business customers? And what can you do to help?
AB: Yeah, it’s been tough, you’ve got lots of businesses that have had a horrific pandemic. And as soon as they get on their feet, there’s something else that hits them. The energy crisis is really, really hitting the small businesses at the moment. But there are things that can be done. One of the things that I’m really keen on talking about is the Small Business Commissioner has said late payments of invoices from suppliers is a significant problem. And I really, really agree with this. The FSB has said that large firms are said to be squeezing these small business suppliers for free credit. And this is something that… there’s lots of things we can’t fix. But surely we can fix this one. And I think we need to support the Federation of Small Businesses in calling for BEIS to restart this name-and-shame policy. Isn’t it awful that the weakest companies have to wait the longest to get their bills paid? And we must do something about this. So doing something about late payments, against the backdrop of the cost of doing business, with energy and business rates rising, it’s hard. But I’m always inspired by these many customers – we have half a million small businesses – who seem to be so so prepared to innovate, pivot, flex, to survive. And that is what entrepreneurship is all about.
One of the things I’m particularly interested in, is high-growth, scalable businesses. And I’m chairing a government task force looking at high-growth women-led enterprises. And we were formed about six months ago, to see what we could do to actually get more women founders leading those high-growth businesses. We’ve got lots of women now sort of looking at more general businesses, but what’s going to make the huge difference to our economy, the success of business in the UK, is if we can have more of those high-growth businesses, whether in biopharma or tech, or in fintech, or in STEM areas. If we can actually put as much resources as we can into those businesses, those are the businesses that are going to create GDP and create jobs. And that’s one of the initiatives I’m working on at present to see if we can encourage those businesses to thrive.
JW: And by encouraging them to thrive, what do you mean? Are you talking about changes to government policy with sort of tax breaks etc? Or is it just sort of setting up an ecosystem where they feel that they can lay out their plans and have others to talk to what does it look like in practice?
AB: Yeah, it’s probably too early to actually sort of publish our findings. But it’s quite wide-ranging. And we’ve got a fantastic board. And they’re all coming to it from different angles. Whether what we need to do to encourage VCs to invest in more women, to see what we can do from a tax environment, to see what we can do to actually put people together and in networks together in the regions. We don’t have all the answers. We’re getting stuck in the moment doing the data analysis, and figuring out what we can do to make all this much more tangible.
JW: Now, obviously, you have big ambitions for 2023. Can you tell me anything at all about IPO plans or timelines?
AB: Journalists are always asking us about IPOs and timelines. We don’t have to raise any further funding for the business. The business is profitable, and highly profitable and growing very well. So we can do these things on our timetable rather than anybody else. But we are growing very fast. We currently have 2,500 people, and we are now hiring another 1,000 people in Manchester. And that’s one of the things I’m most proud of at Starling is that we bring in great jobs and interesting jobs, well-paid jobs, to all parts of the country. We started in London, our first office outside London was in Southampton, the second in Cardiff, and I’m really proud we’re bringing jobs to South Wales. As you’ve probably gathered I’m from Swansea. And now Manchester. Fintech is not just about Silicon Roundabout and London and Shoreditch. Fintech and the jobs we bring up and down the country.
JW: And what would you say to other businesses that are considering doing a similar thing? It’s presumably very successful to have people working in lots of different regions. Are there specific things that you can say that it’s sort of improved from being a London-centric business?
AB: I think that in today’s world, this is an employee-driven market. And Starling has to make itself attractive to all sorts of people in all sorts of parts of the UK. And I think this is the post-pandemic realisation that an employer must think about what it needs to do to be a great employer. And we want to be… we want to access people in all sorts of places that have all sorts of skills. And that is why we have this very distributive office model. Having an office in Manchester means that we can access a huge population of great talent that we wouldn’t be able to access if we were only in Wales and the south of England. So that’s very, very important to us.
JW: Now, you mentioned earlier Engine. And one of the interesting things about Engine is that it’s propelling Starling towards being more of a tech firm than a banking platform. Maybe you always considered yourself as a tech firm. But there is that blurring of lines isn’t there that we’ve seen with other industries. I’m thinking for example of Uber, which very much wanted to call themselves a tech firm, but others insisted no, you’re a taxi firm. And that makes a big difference to how you do business and how you are regulated. What’s your thoughts about that about companies that have come from one traditional industry morphing into being more of a tech firm? And what do we need to do to make sure that we don’t have the problems we encountered with Uber?
AB: Fascinating question. If I put this in context, with my own career, I was a computer scientist who started in Lloyds Bank in the early 80s. Fascinated by technology, that’s what I did. I was really kept in the back room. Technology was something which was not what the CEO did, it wasn’t what the leaders of the organisation did. Technology was a supporting function. And for many, many years, that’s how the big banks looked at technology. It was supporting, it was not leading. And in that career, I went in and out of technology departments. But what differentiated me was that I love technology. I loved leading the charge on innovation. And that is how I got to senior positions in the banking industry. And I’ve always found this surprising, because that’s what banks do. They own they don’t make a product, they don’t manufacture a car, they don’t transport somebody on an aeroplane. What banks do is manage numbers – digital. It is a fundamental digital industry. And therefore it is only in the last 10-15 years, that technology has become more and more important in banks.
And this is why I started Starling. I started Starling because I felt that technology should be leading organisations. It should be far more higher profile in the whole proposition. Because that’s what customers want. Customers want to have the very, very best technology to support themselves in their daily lives, with the person answering the phone, as the backer, not the other way around. So when I started Starling, it was very important that we build our own technology. And looking back in 2014, 2015, I think I was ridiculed in the Financial Times because I had this dream of building new technology. Wasn’t building a bank good enough? Why was I also building the technology? But that was very important. And I think that’s the advantage we now have. And I think that’s an advantage we now go into market with Engine.
JW: Now one of the other things that’s become increasingly associated with the fintech world and the more technological end of the financial markets is cryptocurrencies. I know you have some very strong feelings on that. Obviously, we’ve seen the FTX collapse at the end of last year. This week, it was just announced that South Korea plans to start tracking crypto transactions to crack down on money laundering. And of course, there’s just huge volatility in the market. So what do you think about where we are right now with crypto?
AB: Well, I have been criticised quite a lot for Starling’s stance on crypto. Now, one day crypto will be safe and highly regulated on an international basis with protection for consumers and businesses. But from where we stand at the moment, that’s a dream. One day I can see the potential, but it’s not where we are today. Right now, crypto is lacking sufficient practical, and moral purpose. And I must call for regulators to ensure that crypto exchanges are regulated to the same standard as other financial institutions. And if they’re not regulated, then they cannot continue to trade. Sometimes I’m quite baffled by some of these talks on social media platforms about arguments about the fact that ‘no, no, no crypto cannot be regulated, because that’s the only way that’s going to have the freedom to grow’.
And on the other hand, in the same threads, people are wanting protection, because they have lost their money through scams and through these various platforms. So yes, we have seen trading volumes tumble, and we have seen people losing money. But I don’t think this story has come to an end yet. I think we will have several years of regulators trying to regulate more, I think we’ll see some more failures. I then think we’ll see a second wave of crypto exchanges and schemes of some sort that will be far more friendly to the planet, and will be highly regulated. And it’s not until we see that second wave that we will see a set of technologies and principles and processes that will last a decade.
JW: We’re seeing more and more young people dabbling in crypto, seeing it as a way of making a quick buck. Does that worry you?
AB: Yes. Because as somebody in financial regulation, I spend my whole career trying to protect people from the bad guys. And at the moment, there’s no effective way of protecting customers in this world.
JW: And going hand in hand with crypto is this new phenomenon of NFTs. I’m guessing Anne that you’re not going to be buying any Bored Ape NFTS anytime soon?
AB: Well, I must admit, I’m normally gifted some for Christmas. And therefore the only thing about being gifted an NFT is you can’t re-gift them that easily because there’s an audit trail of where they’ve come from. But yeah, I think it’s an interesting area. I think we should play with it, not take it too seriously, not spend too much money on it. This word has a long way to go and we’re far from understanding it yet.