Starling Bank takes aim at overtaking Big Five rival Barclays

Starling Bank has revealed aims to overtake its mainstream rival Barclays in the business banking market within five years as the digital lender also gears up for a stock market float.

Starling’s founder and chief executive, Anne Boden, told the PA news agency it was a “very realistic” timescale to surpass the Big Five player and more than double its 7% share of the small business market.

In an updated paperback edition of her book, Banking On It, Ms Boden said she no longer considered the likes of Monzo – set up by Starling co-founder Tom Blomfield, who controversially left to launch the rival online bank – as her direct competition.

“The extraordinary experiences of the year 2020 made it clearer than ever that our competitors are now Lloyds, Barclays et al,” she wrote.

Barclays, which she said has around a 15% share of the market, is “now in our sights”, she added in the new chapter.

In less than 18 months, Starling has already more than doubled its small business market share from 3% in June last year, thanks in large part to its move to lend under the Government’s emergency coronavirus loan scheme.

It has now amassed more than 413,000 small business customers and lent around £2 billion due to impressive take-up of Government-backed bounce-back loans during the Covid-19 crisis.

Speaking to the PA news agency, Ms Boden said Starling is no longer a challenger, but a mainstream player that is “taking on the big banks”.

“We see a world where we are growing substantial market share and people will be saying ‘NatWest, HSBC and Starling’,” she said.

“I think we’ll get to that market penetration and people will see us as the same size,” she said.

The group’s meteoric rise in the small business market has reportedly attracted the attentions of various suitors, such as Lloyds Banking Group and JPMorgan Chase.

Having achieved the much-coveted unicorn status earlier this year, when a privately owned start-up is valued at more than £1 billion, the group would likely fetch a healthy price tag.

But Ms Boden – who founded the bank in 2014 – is quick to dismiss any sale plans and confirms the group is firmly focused on a flotation in one to two years’ time.

Despite the spate of market listings over the past year, she refuses to be rushed into the move, adding that she needs to concentrate “on a few things” first before going public.

The group has already reached an important milestone on that journey, having broken even in October last year and remaining profitable for the following 11 months.

It is now heading for Europe, targeting France initially with its so-called embedded finance offering – enabling non-financial players such as retailers to offer banking services.

The group is soon to announce its first hire in France, of a regional head, according to Ms Boden.

It is also looking to secure a banking licence from the Central Bank of Ireland, which will be its “passport into opening in several European markets such as France, Germany and Spain,” she revealed in her book.

Despite the ambitious goals and the prospect of soon having shareholders to appease as well as customers, Ms Boden insists Starling will not lost sight of its principals or, as she claims is the case with some of her larger listed rivals, “lack empathy”.

“Starling stands for something,” she said.

“We’re still an organisation that really believes and strives for treating our customers incredibly fairly.”