A detailed analysis of UK neo-bank Starling Bank

1. DEEP DIVE
o Overview
o Executive Team
o Product Stack
o Customer Acquisition
o Marketplace
o Banking-as-a-Service
o Funding Trends
o Financials
o Customer Lifetime Value
o Unit Economics

2. Founded:
Anne Boden
2014
Founders:
Total Funding: $470 million
Latest Funding: $49 million – May 2020
Est. Valuation: Undisclosed
Investors: Merian Global Investors,
Banking Competition Remedies,
Future Fifty, JTC Group
HQ: London, United Kingdom
Geographies
Served:
United Kingdom
Ireland
Licensing: UK - Banking License (2016)
Customer
Base:
Retail A/c (1.34 million)
Business A/c (200 thousand)
958 as of July 2020Employees:
Partnerships at the core of Starling
Business Overview
Business Tools:
Freeagent
Quickbooks
Xero
Cybersmart
Paystream
Slack
Sparqa Legal
UnderPinned
Wealth:
Wealthsimple
Wealthify
PensionBee
Penfold
Other:
Tail
Bionic
Insurance:
Anorak
Churchill
Equipsme
Nimbla
So-sure
Superscript
Lending:
Habito
Molo
Credit Ladder
Zopa
Funding Circle
B2B Banking Services:
SumUp
Square
PelicanPay
Vitesse
Flux
Goji
CreDec
Mastercard
Raisin
Bankable
Vocalink
CurrencyCloud
Form3
Railsbank
Ditto

3. EXECUTIVE TEAM
Led by Anne Boden, the Starling Bank executive team has an average
experience of 22 years. Women make up for 50% of the team, while female
representation stands at 41% in the overall organisation.
Person
( 💁 indicates female execu0ves)
Position Previous Experience Startups Founded
(Before Starling Bank)
Company Before Starling Bank
Anne Boden 💁 CEO 32 years - Finance - Allied Irish Banks
Tony Ellingham Chief - Finance 28 years - Finance - Nationwide Building Society
John Mountain Chief - Information 14 years - Tech - BJSS
Steven Newson Chief - Technology 16 years - Tech - Cahootsy
Helen Bierton 💁 Chief - Banking 24 years - Finance - Santander UK
Declan Ferguson Chief - Strategy 06 years - Consulting - PwC
Rachael Pollard 💁 Chief - Growth 27 years - Marketing - Compare The Market
Laurence Potter Chief - Risk 18 years - Finance - Direct Line Group
Susanna Yallop 💁 Chief - People 18 years - HR - Eversheds Sutherland
Alexandra Frean 💁 Corporate Affairs 31 years - Journalism - The Times
Clare Nestor 💁 Operations 30 years - Finance 1 Royal Bank of Scotland
Matt Newman General Counsel 20 years - Legal - Thomas Eggar

4. 2017 2018 2019 2020
PRODUCT STACK
Starling Bank has built all its product capabilities from scratch & is
committed to building 52 digital banking products in the near future.
Covid-19 saw the business introduce need-specific products for customers.
Retail Banking Business Banking
Partner Products
Mobile App
Personal A/c
Personal Overdraft
Debit Card
Mobile App
Personal A/c Sole Trader A/c
Personal Overdraft Business Overdraft
Retail Marketplace SME Marketplace
Intl. Payments Limited Co. A/c
Joint A/c Web App
Teen A/c Euro A/c
Debit Card Debit Card
Instalment Credit Business Toolkit
Euro A/c Multicurrency A/c
B2B Banking Services
Connected Card Business Loans
Mobile App
Personal A/c Sole Trader A/c
Personal Overdraft Business Overdraft
Retail Marketplace SME Marketplace
Intl. Payments Limited Co. A/c
Joint A/c Web App
Teen A/c Euro A/c
Debit Card Debit Card
Instalment Credit
Euro A/c
B2B Banking Services
Mobile App
Personal A/c Sole Trader A/c
Personal Overdraft Business Overdraft
Retail Marketplace SME Marketplace
Intl. Payments
Joint A/c
Teen A/c
Debit Card Debit Card
Instalment Credit
B2B Banking Services

5. 0
200
400
600
800
1000
1200
2017 2018 2019 2020
Numberofcustomersinthousands
Starling Bank has a digital native approach to acquire customers
through social media. Its recent efforts have been focused on
growing its business banking division through active marketing.
CUSTOMER ACQUISITION
100k
500k
1 Mn
10 months
2.5x
2x
250k
6 months
5 months
10 months
2x
1.3 Mn
100k
200k
50k
8 months 25k
5 months
6 months
8 months
2x
2x
2x
Retail Accounts Business Accounts
Starling Bank launched
publicly in May 2017 with
its mobile current A/c
Business accounts were
launched in March 2018
National TV Campaigns in
Oct ‘19 & Feb ‘20 to
promote business banking
Growth in retail accounts
can be attributed to one
customer having multiple
types of accounts
👪 37 years
Average age
of a customer
🏰 78%
Customers from outside
London in the UK
🧑🦳 88 years
Eldest customer
of the bank
Aug 2020
Dec 2019 0.3x
8 months
(Retail Accounts include Euro Accounts as well)

6. MARKETPLACE
Starling Bank has picked up steam with Marketplace integrations in 2019,
adding 8 providers across retail & business offerings. In 2020, it has
already introduced 9 new providers. Focus remains on SME services.
2017 2018 2019 2020
Retail
Business
MARKETPLACE
INTEGRATIONS
Close to 33% business customers
have an active Marketplace
integration in August 2020

7. BANKING-AS-A-SERVICE
Starling Bank has spent over £20 million on developing its
banking technologies which run on public cloud infrastructure.
It has 24 clients live on its banking services platform as of November 2019.
£1,556
£213
£5
0 500 1000 1500 2000
Nov-19
Nov-18
Nov-17
Amount in £ ‘000
Income from Platform Services
7x growth
Clients include fintechs, e-money institutions, banks, government, and corporates
The number of payments processed by
Starling Banking Services is said to be
doubling month on month.
Benefits for Business Clients
Flexible API-based
software-as-
a-service (SaaS)
delivery style.
Utilize Starling’s
banking license &
access banking
platform.
Aids in regulatory
aspects such as
scheme compliance,
AML & KYC.
Payments
Services
Provides access to UK &
EU payment schemes like
Faster Payments & Bacs
Account
Services
Various secured accounts
for Payment Service
Providers (PSPs) in UK, EU
Banking-
as-a-Service
Provides building blocks
of a banking offering to
PSPs in the UK & EU
The Offerings

8. FUNDING TRENDS
Investors:
VC/PE
Individuals
Accelerator / Institution
Starling Bank is a proud recipient of the Banking Competition Remedies’
CIF Grant which aims to enhance SME banking in the UK. The fintech has
further self-invested £95 million to strengthen its SME offerings.
$68M
$14M
$97M
$130M
$39M
$77M
$49M
0
20
40
60
80
100
120
140
Jan 2016 Apr 2018 Feb 2019 Feb 2019 Oct 2019 Feb 2020 May 2020
Series A Series B Series C CIF Grant Venture Round Venture Round Venture Round
FundingAmount($Mn)
Starling Bank Funding
Harald McPike
CIF Grant
As of July 2020, Starling Bank holds 3%
SME banking market share in the UK.
It is seeking an additional £35 million
($45M) from BCR to continue the
momentum in SME banking.
Total Funding: $470 Mn
The CIF (Capability & Innovation Fund) Grant, administered by an independent body, the BCR, came from a
£775M fund created by RBS & HM Treasury to boost competition & innovation in the SME banking market.

9. FINANCIALS
The bank has grown its loan book multi-fold through government-backed
schemes during COVID-19. While it still operates on net loss, it plans to
achieve profitability by 2021 through improving revenue streams.
13
(19)
750
14,201
(4,253)
(10,196)
(25,070)
(52,064)
-75000
-50000
-25000
0
25000
2016 2017 2018 2019
Amountin£’000
Starling Bank Financials (in £’000)
Net Income Operating Expenses Net Loss
Income Expenses
• Interest
• Interchange
• Marketplace Commission (2018)
• Platform Services (2018)
• Paid Products (2019, 2020)
• Technology
• Personnel
• Operations
• Marketing
Starling Bank
Revenue Streams
Funds held at
Central Banks & in
Debt Securities,
94%
2%
4%6%
Pre-COVID
(Nov 2019)
Overdrafts
Term loans
(Through Forward
Flow Agreements)
Funds held at
Central Banks &
in Debt
Securities,
67%
3%
22%
8%
0%
33%
During COVID
(Aug 2020)
Retail Loans
BBLS
Funding Circle CBILS
Own CBILS
Deposit Base: £1 billion
Loans & Advances: £54 million
Deposit Base: £3.05 billion
Loans & Advances: £1 billion
Deposits & Loans

10. CUSTOMER LIFETIME VALUE
£900
£1,053
£1,450
£875
£1,500
0
500
1000
1500
0
500
1000
1500
2000
Aug 2018 Nov 2018 Aug 2019 Nov 2019 Aug 2020
Numberofaccounts(‘000)
Avg.AccountBalance(£)
Personal Accounts
£6,000 £7,000
£10,000
£11,600
£15,250
0
50
100
150
0
5000
10000
15000
20000
Aug 2018 Nov 2018 Aug 2019 Nov 2019 Aug 2020
Numberofaccounts(‘000)
Avg.AccountBalance(£)
Limited Company Accounts
£900
£1,100
£1,600
£1,800
£2,850
0
50
100
0
1000
2000
3000
Aug 2018 Nov 2018 Aug 2019 Nov 2019 Aug 2020
Numberofaccounts(‘000)
Avg.AccountBalance(£)
Sole Trader Accounts
Average Account Balance Trends
(Dotted line indicates number of accounts)
Starling Bank’s growing average account balance across
customer segments puts them on a path to monetise
their customer relationships & earn a higher customer
lifetime value.
A typical customer has multiple types of accounts across
retail and business offerings.
Retail Accounts Business Accounts
o Personal Current Account
o Joint Account
o Teen Account
o Euro Account
o Sole Trader Account
o Limited Company Account
o US Dollar Account
o Euro Account

11. UNIT ECONOMICS
£211
£37 £34
£177
£47 £51
£388
£84 £85
0
200
400
600
800
1000
1200
0
100
200
300
400
500
Nov-17 Nov-18 Nov-19
Numberofaccounts(‘000)
Administrativeexpensesperaccount£
Administrative Expenses Trends
Staff Costs per A/c Other Admin &
General Expenses per A/c
Total Administrative
Expenses perA/c
Number of Accounts
Starling Bank began earning positive contribution margins from 2018,
which grew 6.5x in 2019.
Administrative expenses per account depict a stable trend. This combined
with a growing contribution margin can help the company achieve their
goal of reaching profitability by 2021.
£3
£8
£18
-£0.44
£2
£13
0
200
400
600
800
1000
1200
-10
-5
0
5
10
15
20
Nov-17 Nov-18 Nov-19
Numberofaccounts(‘000)
Income&expenseperaccount(£)
Contribution Margin Trends
Net Income per A/c
(Contribution Margin)
Total Income per A/c
Total Variable Expenses per A/c Number of Accounts

12. Disclaimer:
All data used for analysis has been taken from Starling Bank’s annual reports & other publicly available sources.
All views & opinions mentioned are personal and do not represent views of any organisations or institutions.
FINTECH FRATERNITY
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