Anne Boden is not your typical fintech entrepreneur. In a sector bursting with young men in grey hoodies and designer trainers, she is a sixty-something Welsh woman, invariably sporting vividly coloured clothing. She is unusual in another way. Starling, the online bank she founded, is making a profit, unlike most of her rivals in a sector where huge losses are seemingly paraded as a macho badge of honour.
Boden is living proof that, despite ageism and sexism, a middle-aged woman can succeed in the bruising corporate world. In 2014, then aged 54, she became the first British female entrepreneur to start a new bank.
Eight years on, Starling has three million customers and has now broken into the black with a profit of just over £32million. ‘This is a big moment for me,’ says Boden, ‘I am proving a point. When I was knocking on doors in 2014 to raise funding, I was saying it is possible to build a bank with great service and free current account banking – and be profitable.
Proud: Anne Boden says she has demonstrated that banks can offer free current accounts and still be profitable
‘You don’t have to rip off customers, you can be fair. I am really proud.’
In its latest funding round this spring, it was valued at £2.5billion and is eyeing a stock market float once markets become less jittery.
Sceptics worry it is too good to be true. Rivals mutter that the results have been boosted by grants and Covid lending. Fintech valuations soared in the pandemic, but have taken a battering of late. The real test of Starling’s mettle will come when the economy hits hard times in the months ahead. For now, though, it has achieved the profitability that has eluded competitors. How come?
Starling makes high returns on capital, Boden says, because of its low costs and the fact customers keep ‘quite high balances’ on their accounts. Building her own tech platform ‘gave us a huge strategic advantage,’ she adds. And she is dismissive of claims by traditional banks that free in-credit current accounts are loss-leaders.
‘For donkey’s years they have been saying they can’t make money on current accounts. But we have a free current account, we are making money and giving a great service, because we are efficient.’
It’s hard to imagine anyone who looks or sounds less like a female fintech titan than Boden, who exudes warmth and friendliness.
An only child brought up in Swansea, her dad was a steelworker and her mum worked in a department store. But beneath the kindly exterior is granite determination.
She ran up £1million of debt and sold her house while setting up Starling. She also survived an attempted coup by a much younger male colleague, Tom Blomfield, co-founder of rival Monzo. While she has steamed ahead with Starling, he stepped down from Monzo last year. ‘I don’t think about Tom that often nowadays,’ she says.
There have been other confrontations. The Government’s former anti-fraud Minister, Lord Agnew, claimed Starling was ‘one of the worst’ for doing proper checks on firms borrowing under the Covid bounce back scheme. Government estimates suggest taxpayers could face a black hole of £17billion from fraud and company collapses linked to the loans.
There were reports she planned legal action. ‘We are not suing Lord Agnew,’ she says. ‘But we were very surprised by what he said. He is wrong. If loans have gone to people who defrauded us and the taxpayer, we are going to do our best to get that money back.’
Separately, with the other banks, she is increasingly concerned about customers being victims of fraudsters. She called a halt on advertising on Facebook and Instagram in December last year so long as the platforms host ads targeting victims. ‘Why should a social media platform take money from fraudsters’ advertising?’ she asks.
Has she had support from other banks also refusing to place ads with Facebook parent Meta? ‘We took a unilateral stand because we believe it is right,’ she says. ‘Unless social media and telecoms firms, banks and law enforcement get together we will not solve the problem.’
Eyebrows were raised after Starling withdrew its application for an Irish banking licence as a base for expansion into Europe, after a four-year application process. It was ‘no longer top priority’, she says. ‘We were invited to have the licence but we came to the conclusion it was probably the wrong approach.’ She says her primary objective is to concentrate on Engine, her banking software platform. ‘Everybody now wants our tech. Engine is making it available to other banks around the world.’ Has she done any deals yet? ‘We have had lots of conversations in the States and I am off to Australia in September.’
As for the cost of living crisis engulfing the UK, she says: ‘We don’t see a lot of stress among our customers at the moment.’ However, account-holders are spending around 10 per cent more on energy bills and cutting down on subscriptions. ‘They are spending 15 per cent less on entertainment than they did in February,’ she says.
But there has been no depletion of savings balances built up in lockdown. In fact, savings pots are getting bigger – by £600million at Starling, she says. ‘The crisis is going to hit the most vulnerable who have never had any savings.’
The digital bank is not immune from the fallout hitting the tech sector, devastating valuations of businesses such as buy-now, pay later empire Klarna.
Asset manager Jupiter recently cut the value put on its holding of Starling. But Boden argues her bank is well positioned because it is profitable and does not need to raise large amounts of funds.
Some of the £130.5million raised in Spring has been earmarked for more acquisitions after its first purchase last year, a £50million deal to buy Fleet Mortgages.
‘We are in a great position, we never have to raise money again unless we want to,’ she says.
Backers include Austrian-born investor Harald McPike, Goldman Sachs and Merian Global Investors. Boden herself has a significant stake, 6 per cent, so her wealth is on the line if things go wrong. A stock market float could mean a very big payday for Boden. ‘It might be the very end of next year when the markets warm up again,’ she says.
She also leads a taskforce to encourage more female-led tech firms. ‘Did you know that if a female business gets female backing, they are less likely to get the next round of funding? Investors think it is not real funding when women back women.’ She rolls her eyes.
Which is the more sexist industry, banking or tech? She pauses for a while before saying: ‘Tech.’
‘It is really great to have female leadership, for all the women customers and for all the women who work in banks,’ she says. ‘It has changed, but not enough. It is still very dominated by men.’