Proud: Anne Boden says she has proven that banks can offer free checking accounts and remain profitable

Starling Anne Boden: Banks don’t have to tear up customers

Anne Boden is not your typical fintech entrepreneur. In a strip full of young men in gray hoodies and designer trainers, is a Welsh woman in her sixties, always sporting a brightly-colored tracksuit.

It is unusual in another way. Starling, the online bank she founded, is making profits, unlike most of its competitors in a sector where huge losses are presented as seemingly macho badges of honor.

Boden is living proof that despite ageism and gender discrimination, middle-aged women can thrive in the bruising corporate world. In 2014, when she was 54 years old, she became the first British businesswoman to set up a new bank.

Eight years later, Starling has three million customers and has now broken into the black market with profits of just over £32 million.

Proud: Anne Boden says she has proven that banks can offer free checking accounts and remain profitable

“This is such a big moment for me,” Boden says, “I’m making a point. When I was knocking on doors in 2014 to raise funding, I was saying it was possible to build a bank with great service and a free checking account — and be profitable.”

You don’t have to steal customers, you can be fair. I am really proud.

In its latest funding round this spring, it was worth £2.5 billion and is looking to float the stock market once markets become less tense.

Skeptics worry it’s too good to be true. Competitors hope the results are boosted by COVID grants and lending.

Fintech’s valuations have skyrocketed in the shadow of the pandemic, but have taken a hit recently. The real test of Starling’s ability will come when the economy is going through tough times in the coming months.

For now, though, it has achieved profitability that has eluded competitors. How is that?

Starling, Boden says, yields high returns on capital, due to its lower costs and the fact that clients keep “very high balances” in their accounts.

Building its own technology platform, she says, “gave us a huge strategic advantage.” It rejects the claims of traditional banks that free checking accounts payable leads to losses.

They have been saying for years that they cannot make money from checking accounts. But we have a free checking account, we make money and provide great service, because we are efficient.

It’s hard to imagine anyone looking or sounding like a giant female Boden, who exudes warmth and friendliness.

The only child was raised in Swansea, her father was a steelworker and her mother worked in a department store. But beneath the cute exterior is the granite design.

She accumulated debts worth £1 million and sold her home while setting up the Starling Company. She also survived a coup attempt by her younger colleague, Tom Bloomfield, the co-founder of Monzo competitor.

While she was progressing with Starling, he quit Monzo last year. “I don’t think about Tom much at the moment,” she says.

There were other confrontations. The government’s former anti-fraud minister, Lord Agnew, has claimed Starling was ‘one of the worst’ to conduct proper checks on corporate borrowers under the Covid reversion programme.

Government estimates suggest taxpayers could face a £17 billion black hole from loan-related corporate fraud and collapse.

There were reports that she planned to take legal action. “We are not suing Lord Agnew,” she says. But we were surprised by what he said. He is wrong. If the loans go to the people who defrauded us and the taxpayer, we will do everything we can to get that money back.

Separately, with other banks, it is increasingly concerned about customers being victims of scammers.

It called for ads to be halted on Facebook and Instagram in December last year as long as the platforms host ads targeting victims. “Why should a social media platform take money from scammers’ ads?” She asks.

Have you received support from other banks that also refuse to place ads with a parent on Facebook? “We’ve taken a unilateral stance because we think it’s right,” she says. Unless social media, telcos, banks, and law enforcement come together, we won’t solve the problem.

The surprise was raised after Starling withdrew its application for an Irish banking license as a base to expand into Europe, after a four-year application process.

She says it is “no longer a top priority”. We were invited to get the license but came to the conclusion that it might have been the wrong approach. She says her primary goal is to focus on Engine, its banking software platform.

“Everyone now wants our technology. The engine is making it available to other banks around the world. Have they done any deals yet? We’ve had a lot of conversations in the US and I’m going to Australia in September.

As for the cost of living crisis gripping the UK, she says: “We don’t see much tension among our customers at the moment.”

However, account holders spend about 10 percent more on energy bills and cutting subscriptions. “They spend 15 percent less on entertainment than they did in February,” she says.

But the savings balances that had accumulated in the closure were not exhausted. In fact, provident funds are increasing — by £600m at Starling, she says. “The crisis will hit the most vulnerable who have never had any savings.”

The digital bank is not immune to the fallout from the tech sector, and the devastating valuations of companies like the Klarna empire, buy now, pay later.

Asset manager Jupiter recently lowered the value placed on his Starling holding. But Boden says her bank is in a good position because it is profitable and does not need to raise large sums of money.

Some of the £130.5m raised in the spring was earmarked for further acquisitions after its first purchase last year, a £50m deal to buy Fleet Mortgages.

“We’re in a great position, and we never have to raise money again unless we want to,” she says.

Backers include Austrian-born investor Harald MacBayk, Goldman Sachs and Merian Global Investors. Boden herself owns a large stake, 6 percent, so her fortune is on the line if things go wrong. A stock market float could mean a very big payday for Boden. “It could be the end of next year when the markets will get warm again,” she says.

She is also leading a task force to encourage more women-led tech companies. Did you know that if a women’s company gets women’s support, it is less likely to get the next round of funding? Investors think it’s not real finance when women support women. She turns her eyes.

Which industry is more gender-biased, banking or technology? She paused before saying, “Tech.”

“It’s really great to have female leadership, for all the female clients and for all the women working in the banks,” she says. It has changed, but not enough. It is still heavily dominated by men.

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