- Starling’s annual report and update for 2020 to date indicate that it expects to reach profitability by 2021.
- Its efforts to build relationships with business customers have positioned it to reach profitability in the next few months.
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The UK neobank reported results for its fiscal year ended November 30, 2019, and for the eight months ended July 31, 2020, highlighting impressive growth in revenue and deposits despite the outbreak of the coronavirus pandemic, per AltFi. Its annualized revenue run rate has increased more than 370% since November 2019 to reach £80 million ($105 million).
Starling’s average deposits jumped 30% across consumer and business accounts since the beginning of this year — with exceptional growth in the latter segment:
- Consumers’ average deposit rose from £950 ($1,249) in December 2019 to £1,500 ($1,973) in July. At 1.25 million retail users, Starling is smaller than rivals like Revolut (12 million) and Monzo (4.4 million), but its growing deposits could signal deepening engagement and customer loyalty. It has made a concerted effort to extend pandemic support to retail users: For example, early into lockdown directives, Starling rolled out “Connect,” a second debit card designed to help those in isolation by allowing someone else to shop on their behalf.
- Among businesses, the average deposit increased from £12,000 ($15,772) to £15,250 ($20,044). The neobank now counts 200,000 business users, which is more than double the 82,000 it had at the beginning of the year. The spike is likely due to Starling’s aggressive efforts to expand its business offerings and cater to SMBs amid the crisis. Another key initiative has been its participation in UK government-backed loan schemes, through which it lent a whopping £903 million ($1.17 billion) by the end of July.
Starling’s extensive efforts to build relationships with business customers appear to have positioned it to reach profitability in the next few months. In May, Starling CEO Anne Boden warned that the neobank’s plans to break even by the start of 2021 — and to launch an IPO in the longer term — would be pushed back due to the pandemic.
But with the neobank’s stellar performance in business banking in particular, Boden said the neobank is “back on track to be profitable by the end of the year.” If it continues its strong show of support for SMBs, Starling will be able to not only drive revenue, but amass more business customers and establish relationships that endure beyond the crisis.
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