Digital challenger bank Starling Bank has grown its market share in the SME banking space to 7.5% in just four years.
The mobile-only bank has increased its share of the number of SME accounts in the market, reaching half that of its main rival, Barclays.
“We’ve had some great successes recently, we now have a 7.5% market share of the UK SME market and we’ve done that in just four years,” said Anne Boden, chief executive of Starling and of Swansea, who founded the bank in 2014.
She added: “We are now the most bank-switched in the UK in the last four quarters. More people switch to Starling than any other bank and 68% more than our next competitor Lloyds Bank.
In Wales alone, Starling Bank saw 41% year-on-year growth in the number of business account openings, with the total number of business accounts opened now standing at 14,760.
During the coronavirus pandemic, Starling Bank provided £1.4 billion in Covid rebound loans to its business account customers, with 66% of recipients based outside of London.
Ms Boden said the bank continues to support these SME customers.
She said: ‘A lot of them have taken out rebound loans and CBILS and we’re managing that process and making sure we’re doing the right thing to support them and take care of taxpayers’ money.
The Bounce Bank loan scheme was set up in April 2020 by the UK government to keep small businesses afloat during the coronavirus pandemic.
A total of 1.5m loans worth £47bn have been issued under the initiative.
However, the government has estimated that more than a third of loans will never be repaid due to fraudulent activity and defaults by legitimate borrowers.
State-guaranteed loans were granted with only light checks on borrowers.
Asked if she foresees that the Treasury could ask banks to take greater responsibility for prosecuting fraudsters when proper due diligence was not carried out, Ms Boden said that all banks were mandated to carry out very rigorous fraud checks.
“The Rebound Bank Loan Scheme was intended to get loans of up to £50,000 to small businesses as quickly as possible. Starling did all those checks,” she said.
“With a system of this size, there would always have been fraud. But there is no expectation at this time that, in the system as a whole, this fraud will be more than expected.
She added: “If a bank has not implemented the processes as defined, then the bank must take responsibility. I can only speak for Starling, but we have done all the necessary anti-fraud checks. I think most banks have done that as well.
“The overall percentage of fraud is likely within the expected levels set at the start of the program.”
On the Welsh Government’s plans for a new community bank in Wales, Ms Boden questioned the cost of rolling out 30 outlets in communities.
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She said: “We have free banking services through proposals such as Starling who provide these services. If it’s not just about providing free accounts, is it about providing something else on the street? »
“The question of what is the best way to engage with communities right now is probably a combination of the post office and digital banks,” she adds.
Any community bank, which will be run by the Monmouthshire Building Society, would require regulatory approval and fundraising of millions for the necessary bank reserves.
Ms. Boden also said that while people need a location to access certain services, over time these locations are likely to become the post office or a shared branch network.
“But don’t assume it’s the older generation who want these branches to stay open or not be able to use digital. We have clients in their 90s who use our services,” she said.
“The recent pandemic has meant that many people have stepped up to technology for the first time. Their motives are now their connection to the NHS and to their family. More and more people are going digital and want more convenience.