Two years ago, Starling In the UK, large banks are known as digital banking startups that target dissatisfied retail customers with easy-to-use accounts, overdrafts and money transfers. However, the UK’s largest business loan market is relatively small, with over 5 115,000 in loans.

Starving opened the door to small and medium-sized enterprises (SMEs) in the wake of the Covenant-19 epidemic, which suddenly turned into a far-flung operation and feared a severe recession. In March of this year, Starling provided £ 2.2bn in business loans to more than 40,000 customers.

”[Starling] It’s a crisis, ”said Stoke Brokers Good Bodie analyst John Krone. There were questions about his ability to convert deposits into credit, so the epidemic was a big step forward.

The technology base was laid before Covid-19. A.D. In 2019, Starling was awarded አቅም 100m by the UK Capacity and Innovation Fund to build a new system for lending to businesses. The money was part of a plan to improve competition in the UK Commercial Bank market, which is being held by veterans such as Nest, Barclay and Lloyd.

Starling has invested another £ 100m to develop the new technology and the system was almost ready by the beginning of 2020 when the epidemic hit.

“We had basic building blocks, but we didn’t have the product,” said Anne Boden, Starling CEO.

A great opportunity for Starling came when the UK government launched a coronavirus business support program such as Bounce Back Loans and sought out banks to help distribute them. He had some quick ideas to do Starling.

“We had three or four days’ notice to find out the rules and to start production,” Boden said. “It was a very difficult decision for us to make. We have to have an amazing volume, we have to set up our systems on time and we have to be ready to face the press, because there is a lot of visibility about these loans. But if we didn’t make these loans, people would always tell me that Starling was not with me when I was looking for you.

Although Boden and her team thought that this would not be the case, they took the road. “I remember being there the day we pressed the key to open the website for people to apply. We did not know whether fraud or people were desperately looking for those loans. ”

Ann Boden, CEO of Starling © Starling Bank

There was a flood. Starling has lent more than £ 2bn in government coronavirus business loan programs, entering the small business market and providing fast customer base.

“We make so many loans, we always expect to have more customers. . . But twice it happened quickly [as we expected]. The transition to digital has accelerated within 10 years of the epidemic, ”Boden said.

The Starling epidemic was not the only commercial crisis. Launched in April 2020 Starling “Connected” card It allows volunteers to spend money on behalf of marginalized people.

A woman looking at the Starling Neobank website

Starling, like Neobank, uses cloud technology to avoid investing heavily in physical assets

According to City Global Insights analyst Ronit Goss, when Starling was hit by the epidemic, he was as strong as any other neo-banker. “The advantage of neonbanks is that they are digital,” he explains. “This makes it easier to release new products – they are built for the digital world, but the existing banks are either tourists or travelers. [in it]. ” He said the use of cloud technology by Neobanks is important as it eliminates the need to spend a lot of money on infrastructure.

Starring added that Ghose, an experienced banking executive, was even more useful. Boden is a trained computer scientist but worked in the industry for 30 years before starting Starling – in institutions such as Allied Irish Banks, Royal Bank of Scotland and ABN Amro. “When I built Starling in 2014, I thought banks were spending a lot of technology dollars, but for the wrong reasons,” she said.

Big banks are arguing that it will come to an end by spending large sums of money on large, multi-year projects. “It’s more efficient to build, implement, fix and update small things,” she said. “It’s also less dangerous. Starling is about small, additional changes, and each incremental change makes things a little better.

“The banking industry has woken up and understands that we have a lot to learn from other industries.”

As the UK economy recovers and businesses return to normal, Starling will face new challenges. One of the big questions is how well SME loans perform and whether there is a wave of bankruptcy from the companies involved. The Bank of England has said that the number of low-indebted businesses has increased since its inception, and warns that losses could increase by the end of this year.

“We are delighted that businesses are doing better than we expected,” said Boden.

Starling At the end of 2022 he spoke of floating © Starling

Although there are defaults, the government will be on the hook for the losses due to the loan, so there is little risk for Starling’s balance.

In any case, the programs are a valuable experience for Starling, says Cronin. “For any new lender, there are lessons to be learned – you don’t have information that your peers have. However, for the sake of capital, he has found a suitable way to study at a limited cost.

Another challenge for Starling is to keep customers registered during the outbreak and win new ones.

Goss says there is a lot of potential in the market. Citing rivals such as Revolut and OakNorth, Starling said, “Fintech is not the only SME brand.” “It’s a rich stitch for neonbanks. SMEs often complain and feel that they are being served by their bank. Small business customers are always looking for alternatives.

It will not be easy though. Other Fintex, UK lenders targeting SMEs are also interested in the market – and have more lending potential.

However, Starling’s plans go beyond lending to micro and small enterprises in the UK. He worked earlier this year First purchase, Specialist Lender Fleet Mortgage በ 50m, ዳደር 1.75bn Mortgage under Management. It outlines plans to expand into what Europe calls banking services – allowing companies to create their own savings accounts, current accounts and debit cards using Starling technology.

The company’s capacity has attracted the support of some of the bigwigs. In March, Fidelity and Qatar Investment Authority a £ 272m investment round This starling is estimated at 1 1.1 billion. Next month, Investment Bank Goldman Sachs joinedገባ By depositing ሚ 50m. Starling spoke of floating in late 2022.

“Starling had a better crisis than many neo-banks,” Gos said. “It’s in a good strategic position and now it has a lot of options to grow.”