If it seems as though Monzo and Starling suddenly disrupted the banking world at the same time, it's because they did – and it's no coincidence. Starling is led by Anne Boden, a banking exec with decades of experience – including a stint as Allied's COO – and Monzo's CEO Tom Blomfield was once her employee. After reports of disagreement, Blomfield and other staff departed to found Monzo, now one of Starling's biggest rival. The competitors continue to feud, according to reports, with accusations of spying and employee defections.
That drama is an outlier, though. Starling has steadily grown without major controversy since its 2014 founding, though at a less active rate than rivals. As of August 2019, Starling has just shy of 800,000 customers, with about 60,000 of those business accounts, with Boden saying it's on track to pass a million this year with £1 billion in deposits.
That latter figure may prove the most important: Starling customers deposit an average £1,450 a month into their accounts, on par with legacy banks and suggesting they're using it for day-to-day banking rather than simply as a spending card. Starling has fewer customers than other challenger banks, but it has more of their money.
As the UK's big challenger banks – Monzo, Revolut, Starling and N26 – continue to grow in popularity, we're reviewing the services they provide to bring you a comprehensive view of their usability. This includes their features, account types and security practices.
Customer account services
Starling has the key challenger bank features: instant transaction notifications, savings sub accounts (here, they're called "Spaces") with a roundup function, and spending broken down into categories for better budgeting. Alongside a personal account, you can also add a joint or business account, as well as a Personal Euro account, handy for travellers or expats; there's a 0.4% fee on exchanging from pounds to euros, and then transactions are free.
Like other challenger banks, Starling's API allows third-party companies to link up with the app, such as PensionBee, Churchill and Flux, among others. Starling is the furthest along with this idea of third-party services, with its Marketplace already built into the app with a selection of 11 partners covering bill management, insurance, receipts, savings and more; a charity section is in the works. This all means you can add and manage such services, be it signing up for an ISA or tracking receipts, directly via the app. This is the promise of open banking, and with Starling it's already reality.
Starling is also streets ahead of challenger rivals when it comes to loans. Need a bit of extra cash, and Starling has an overdraft like the others, but it also has a built-in longer term loan facility. Tap into that tab, and you'll be shown exactly how much you can borrow and at what rate, with the interest charge personalised based on your credit rating and always at a rate that's lower than your overdraft. It can be paid back over up to two years, with your first repayment date and amount clearly stated. It's almost too easy, which could of course be a risk with loans; some of us already live full time in overdraft, and this could become a slick version of that.
It's not all high-tech; some of it is directed at more analogue support. Starling's partnership with the Post Office means you can deposit physical cash into your account, rather than merely move money from one digital account to another. Got a cheque? Starling (like some rivals, including Monzo) can manage that too, just plonk it in an envelope and mail it in with your account number, and it'll be deposited. For anyone who's had to wait in a queue at a traditional brick-and-mortar bank to cash a piece of paper, this is a revelation – and a serious time saver.
Starling doesn't have all the headline-grabbing features of some former employees, but it has what you want from a bank – cash deposits, easy loans, and savings tools – but with its third-party marketplace, Starling shows what the future of banking could be, all while letting you deposit cash, too.
Business account services
Starling offers a full business account as well as a sole trader account, both of which have no monthly fees (for the time being) and don't charge for withdrawals, transfers or electronic payments; depositing cash costs £3.
Starling supports both FreeAgent and Xero accounting software, letting businesses export their transactions to the accounting software suites. That third-party marketplace means it's easy to use Flux to track some receipts, and those in-app loan applications make it simple to borrow cash when you're in a tight spot. Customers pay in cash? Starling is also set to launch a web portal to access accounts – but at first only for business users.
To get a business account, you'll need to be a limited company. And to get a sole trader account, you'll need to have a personal account with the bank first. Right now, Starling says all business accounts are free for a limited time; in the future, they'll only be free for micro-businesses with fewer than ten employees and less than £1.7 million in annual revenue.
Starling fees explained: The current and business accounts are free, with no paid-for, premium account options. Transfers and ATM withdrawals in the UK and overseas are free, though there's a charge to exchange to foreign cash. Plus, Starling pays interest rates of 0.5 per cent on up to £2,000, though it falls to 0.25 per cent on higher amounts
App
Open Starling's app, and with white text on a dark screen you're shown the key figure you're probably searching for: how much money you actually have. A slide-out menu houses navigation to find Spending, Spaces, Payments and more. Payments are easily sent, with regularly scheduled transactions, such as direct debits or subscriptions, held in one place for easy access. The Marketplace of third-party services is handily in-app, making it easy to figure out which are supported.
An FAQ and help section is built into the app, so you need not head to the website if you have a question. There's also a chat tool to ask specific questions of an actual human.
Perhaps one of the best features in the app is the lack of nagging. Starling doesn't constantly try to upgrade you, there are no paid-for accounts. Because of that, using the Starling app feels like a legacy bank – but in a good way, with the confidence that it doesn't have to push account upgrades, and can just offer a great service instead.
Security
Starling had to review its data policy after a customer complained that their passport details could be seen by anyone with the URL of the image, and that the startup bank acted too slowly acknowledging and sorting out the concern. The bank needs to ensure it's reacting to such disclosures quickly to keep its users, and their cash, safe. That said, Starling is backed by the FSCS, so deposits are protected up to £85,000.
In the app, Starling has a few key features to keep your card secure. Under 'Card Controls', you can allow or ban ATM withdrawals, online or mobile payments, magstripe payments, or gambling transactions. The app suggests that if you're not going to be using Starling for mobile payments or online, you should turn them off. Starling also offers location-based fraud protection, using your smartphone's location for fraud analytics, so if someone knicks your card and uses it overseas, it'll be easier to spot. Missing cards can be frozen, with new ones easily reordered.
Verdict
Starling offers all the good aspects of legacy, incumbent banks – interest rates on current accounts, the ability to deposit cash and cheques – with the handy features of challenger banks, such as saving pots with roundups, easy payments to friends, and instant notifications. That would be impressive enough, but chuck in those third-party services that are actually integrated into the app, and we've got the future of banking on our hands. It's clear which direction personal banking is going in, and Starling is at the head of that pack, making Anne Boden's startup a good choice for anyone looking to ditch the incumbents and try a challenger bank.
Looking for other challenger banks? See our Monzo review, Revolut review, and N26 review to see how the service compares
This article was first published on September 9, 2019. It has since been updated
This article was originally published by WIRED UK
