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Beyond change

Side by side with Starling Bank to reinvent banking

Small business owner with digital tablet

A new, digital entrant in the market, Starling Bank was founded on a single belief: the existing model of banking needed reinvention. The consumer bank launched successfully in 2017. Only a year later, Starling followed this up with a ground-breaking new offering for business customers.

Since the start, PwC has been Starling’s partner in its mission to transform banking and to prove wrong those sceptics who said, “You can’t do that.” After working with the bank on its initial consumer rollout, we have continued to support Starling as it disrupts the small-business market and beyond.

But developing a business offering required deep research to understand what innovative UK businesses wanted most, and where existing banks were failing to meet those needs. Building on that understanding, Starling Bank worked with us to not only make themselves eligible for but to defy the odds and secure a £100m grant – among the highest level of funding available – from the UK’s Capability and Innovation Fund (CIF). The CIF is a fund set up to stimulate competition in the UK business banking market and improve outcomes for business banking customers.

The grant gave Starling the freedom to deliver on the promises in its application: to create and launch a suite of 52 new products and services designed specifically to serve entrepreneurs, sole traders, micro-businesses and small enterprises.

As the first full-service digital bank of its kind serving that market, Starling Bank has since introduced other new banking tools, lent more than £1.8 billion to UK SMEs and acquired more than 300,000 small-business customers. A winner of multiple British Bank Awards in 2018, 2019 and 2020 – including Best British Bank for three years in a row – it has sparked new conversations across the industry about how to serve consumers and businesses, and inspired other banks to follow its lead.

The challenge:

Starling Bank launched in May 2017 as a digitally native mobile retail bank. Founder and CEO Anne Boden says her mission was to “change banking forever”.

Shortly after it began offering services for consumers, Starling Bank set out to change business banking as well. To support this objective, it first aimed to secure public funding through the CIF, which would give it a platform to build a revolutionary suite of business banking products. But that meant Starling Bank needed to research, build and launch a digital offering for SMEs from the ground up. With the top CIF awards typically reserved for banks that already offered such services, rather than for market newcomers, it made the challenge even greater.

The approach:

Having worked with PwC since its founding, Starling Bank asked for our help to develop a new small-business offering that stood out in the marketplace and addressed businesses’ unmet or underserved needs. It also sought support for crafting a funding application with the best possible chances of winning a high-value grant from the CIF.

Guided by our ‘Business, Experience, Technology’ (BXT) philosophy, we set out an ambitious timeline to deliver everything needed within a little over a year.

The client/consultant relationship

The collaborative effort to create a new suite of banking services involved stakeholders from across Starling Bank, as well as our experts in customer transformation, assurance, public sector, tax, technology and more. The teams met regularly to propose and discuss ideas, and develop a roadmap demonstrating Starling Bank’s commitment to serving those customers in unique, innovative and valuable ways.

This required honest, open conversations, creativity and design thinking with a multidisciplinary approach to solving problems and bringing ideas to life.

But the key to the entire project was understanding what SME banking customers wanted and needed, versus what they were getting from established banks. Together, we ran focus groups and co-creation sessions held with real-world customers from across the UK to identify unmet banking needs. These findings showed that customers expected much more than their banks currently offered – but that they had few expectations of getting what they wanted. Particular pain points were complex products, overwhelming choice, and offerings that were too joined up. Starling had found its differentiators: it was now able to bring its personal banking ‘magic dust’ to the world of business banking.

Working with these insights, the teams began developing ideas for services to fill these gaps. Customer needs dictated all of Starling Banks propositions and commitments: we reinvented the functionality that sits around simple products and services; and began to reimagine how more complex products would work with improved data and data science.

Most importantly, we helped Starling redefine business banking offerings in the same way that they’d previously done for consumer banking. By truly understanding the user's needs and putting them at the heart of any decisions.

The next step of the project – seeking a CIF grant – focused on crafting an application that conveyed Starling Bank’s unique ‘DNA’. Over several months, a large team from across Starling Bank and PwC met regularly to work on this. These sessions frequently involved intense discussions, reflecting how deeply everyone felt about providing better services, boosted by the extra funding.

“The importance of good design in digital engagement with customers, the importance of that sort of lean startup model where you’re in a continuous feedback loop with your customer, the product is never finished – those are all things I think that we’ve demonstrated through Starling that we get. It’s about, ‘What did you do?’ and ‘How did you do it?’”

Steve DaviesPwC United Kingdom

The impact:

Meeting project objectives

Starling Bank was awarded £100m, among the largest CIF grants possible, and one that was unprecedented for a new market entrant. The bank immediately began working to achieve the objectives it had set out in its application: creating nearly 400 new jobs, making more than £900m in lending to SMEs available, and achieving a UK market share of 6.7% by 2024.

The grant allowed Starling Bank to ultimately deliver its suite of 52 new products and services to meet the needs identified by real-world customers: flexible deposit accounts, multiuser card functionality, instant invoicing and VAT management, among others. In its own words, it has enabled Starling “to radically transform business banking for customers in the UK, disrupting the stronghold of Big Four banks...delivering a solution that helps financial innovators to coexist in a connected and collaborative banking ecosystem.”

In a short period, Starling Bank has achieved an entirely new level of digital banking service in an industry long known for being slow to change.

Challenges

One major challenge was the short timeframe required for delivery, in which Starling Bank had to develop a completely new suite of market-validated banking services and then create a compelling CIF grant application. Another was the application goal: to demonstrate the ambition and credibility of a completely new contender in the small-business market. PwC’s BXT approach helped Starling Bank overcome these obstacles.

Lessons learned

Meeting Starling Bank’s objectives involved a lot of work, passionate collaboration and even some necessary friction at times. The positive outcome illustrates the value of solving problems by bringing together many different perspectives, as well as by paying attention to end users’ opinions and needs. It also shows how ambiguity can be a springboard for creativity: good solutions can result from people challenging one another and exploring ideas that others might say “can’t be done”.

Its new services also highlight the need for agility, to enable continual adjustments to meet customers’ needs and solve problems as they arise – no more rolling out major updates just two or three times a year.

Impact

In 2018, 2019 and 2020, Starling Bank won British Bank Awards categories of Best British Bank, Best Current Account Provider and Best Business Banking Provider. By mid-2020, the bank was on track to satisfy or exceed the goals identified in its CIF application. To date, it has lent more than £1.8 billion to UK SMEs, rolled out new business tools and an SME web portal, and attracted more than 300,000 business customers.

Many of the bank’s digital services proved especially beneficial after the arrival of COVID-19, as they enable customers to deposit cheques, apply for loans and seek professional banking advice without having to leave their home or business.

By offering a new model for consumer and small-business banking, Starling has provided an impetus for change and inspired the industry to consider different, more customer-driven and research-based approaches to service.

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Steve Davies

Steve Davies

Partner, PwC United Kingdom

Tel: +44 (0)7590 352408

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