Is Starling dead now?

Doshwaster

It will be interesting to see how Chase do as a new entry into the UK market but I'm sticking with Starling as my pocket money account (salary, mortgage and other bills are with HSBC as I can't be bothered moving). I just find it handy to have day to day spending in a different account.

There have been a number of big US firms in the past who have tried launching in the UK and failed - just as British companies have been burnt in the US - as the consumer culture is so different. Only time will tell whether they do well or end up retreating.

[Deleted User]

Daliah said:

sebtomato said:

Daliah said:

sebtomato said:

Thanks for your patronising comments.

I am still unsure why you picked on Starling as the bank who will feel the competition from Chase to the extent of disappearing. I would say there are one or two other existing, or prospective, UK banks who are at much greater risk of vanishing, though not exclusively because of the entrance of Chase. From a consumer point of view, if a UK bank disappears, this might be a bit annoying but is really of no relevance as we either get transferred to a different bank automatically, or we can move ourselves.

I "picked on" Starling because I am a Starling customer. I don't have accounts with Monzo or other new banks.

After opening my current account with Chase this week (followed by the savings account), I suddenly realised that I am not likely to use Starling anymore, unless they can match cashback and savings rate, which they most likely can't (they don't have the financial power of JP Morgan behind them).

Last week, I was still recommending Starling to friends for ease of opening an account, ease of use, no fees for using abroad etc. This week, I wouldn't. Things change quickly.

I think the difference between your and my banking choices might that you seem to think that you have to do all your banking at one bank. I don't. I just pick and choose their services. For example, I use Santander for DDs, Chase for cashback and now also instant access savings (for as long as these last), Natwest, Nationwide, Skipton and Virgin Media for Regular Savers, Starling for my Euro activities, Halifax for rewards, Barclaycard and Amex for cashback credit cards, Halifax for credit card spending abroad, several currency conversion firms for international money transfers, and many more Virgin Media accounts for more savings. If I was still working, I would probably also have one or two different banks for self-employment.

We have an amazing spread of banks, with no reason for sticking with just one single one of them. Of course, it there was one single bank that always offered the best for everything, I might be tempted to just use that single bank, and I am sure many others would too. I doubt, and hope, however, that we will ever get to the stage where one bank will be the best choice for everything, not least because lack of competition is the death of innovation.

I think this is rather missing the point. Banks are competing for active users. The fact some people have umpteen accounts doesn't really matter, what matters is where their money is and the services they're using. If everyone moved all of their money out of Starling then it isn't going to be much consolation to them if customers keep an inactive account open and the app installed on their phone.

It's actually an interesting question as to whether Chase will take over Starling and Monzo's share of the market and what that will mean for the latter two in the long run. Clearly the strategy they're using is to try and target the younger, app-centric section of the market who are currently using Starling and Monzo. The reason they're doing that is that the barriers to entry are much lower - targeting the traditional banks is far more difficult as they'd need to have branches and a higher number of staff. Chase have the resources to not only copy most of the innovative features of Starling/Monzo but also to offer competitive interest rates and cashback. I'm not sure there is much Starling and Monzo will be able to do about this in the long run.

randompenitent

Starling works great. I'm a Starling customer and I use it as my main account. No complaints whatsoever. I also have a first direct account: generally great customer service, but technology that sometimes creaks. Their early attempts at a mobile app were sometimes pretty embarrassing. Their inability to deliver a reliably deliver new credit and debit cards to me on expiry of the old ones was also a pain. No other organisation seemed to have this problem.

I've not seen anything exciting or new from Starling for a while now. While I'm not sure that I want excitement from a bank account, it would be nice to see them do something both new and useful - but I've no idea what that might be. 

The noise at the moment seems to be all about Chase. The main attraction of Chase is the 1.5% interest on savings - in other respects, it seems like a rather incomplete version of yet another digital banking service. The high savings rate is clearly a big loss leader for Chase.  It can't last forever, even with JPMorgan footing the bill.  But if lots of customers sign up, it will have done its job. Paying for new customers is one thing, paying to keep them long-term is quite another. 

sebtomato

randompenitent said:

I've not seen anything exciting or new from Starling for a while now. While I'm not sure that I want excitement from a bank account, it would be nice to see them do something both new and useful - but I've no idea what that might be. 

I agree. Their initial features were great, like real time notifications of spending, categorisation of spending, virtual cards added to the phone right after the account creation etc.

Now, they are running out of ideas, all the key features most people are ever going to use or interested in are already there.

The main attraction regarding Chase is indeed the market leading Savings account, but also the 1% cashback on the current account. That should be sufficient to take a large chunk of Starling's business (and other new banks). 
Chase also leads the way when it comes to withdrawing cash abroad, and particularly in the USA.

Yes, paying for new customers is one thing, sustaining it is another.

Arguably, having lots of people with dormant or inactive accounts with Starling or Monzo is not going to be a business either. I think lots of people (like me) don't have their main accounts (receiving salaries, paying mortgage) with them.

Either are apparently yet to make a profit, so they are loss leaders too (having invested in features and customer acquisition). Can they survive an assault from a very large player with deep pockets?

Apparently, only 1 in 12 personal accounts are with a "digital" bank, so it's also interesting that Chase is going after that small part of the market, unless it's a low cost of entry towards some wider plans.

400ixl

Chase have has the cash back for quite a while now and have not made a significant dent in any of the challenger bank's business. They have run out of steam.

To get the more traditional accounts with the more affluent side of society they are now trying to entice people with higher saving rates. That is not going to significantly impact the likes of Starling, more the traditional accounts, and most likely just the savings side of that business. People chasing the current best interest rate is hard to maintain and afford for a retail bank.

I don't see Chase having much of an impact on Starling at all. If that were going to be the case it would have already happened.

Starling also has a significantly growing business outside of their own retail banking with the core banking platform, making them a more sustainable business that Chase from a UK perspective.

If Chase does not manage to grab a significant business in the next 12-24 months, then I can see them closing down the UK retail banking operation within the next 5 years. It's more make or break for Chase than Starling.

Daliah

sebtomato said:

Arguably, having lots of people with dormant or inactive accounts with Starling or Monzo is not going to be a business either. I think lots of people (like me) don't have their main accounts (receiving salaries, paying mortgage) with them.

Either are apparently yet to make a profit, so they are loss leaders too (having invested in features and customer acquisition). Can they survive an assault from a very large player with deep pockets?

As per July 2021: Starling broke even for the month of October 2020 and has recorded a profit every month since then https://www.starlingbank.com/news/starling-bank-revenue-rises-600-percent/

As per March 24 2022: JP Morgan shareholders sound alarm over JP Morgan's plans for UK digital bank Chase
https://www.thetimes.co.uk/article/shareholders-sound-alarm-over-jp-morgans-plans-for-britain-rkgp2wv8g

adamp87

sebtomato said:

Daliah said:

There are tons of features Starling (and Monzo) have that Chase has yet to implement, and which they may or may not want to provide.

Apart from overdrafts (missing from Chase, but apparently being worked on), I am not too sure many others features are truly missing. Chase also has some features that Starling doesn't have, like rounding or numberless physical cards. Creating an account takes about the same time (a few minutes), with the virtual Mastercard loaded right away on the phone.

What's the real competitive advantage now of Starling (and other new banks like Monzo or Revolut)?

Surely, Starling and others are  going to be bleeding customers if Chase can offer cashbacks and a market-leading saving account?

I think that wildy depends on many factors. 1% cash back for 12 months sounds good but in reality that’s a tiny percent the average person probably won’t make huge use of. Obviously it’s different to forums like these.

Same with the savings account. I’d wager customers of starling like the brand, the app design and use and probably will stick with it, or open additional accounts.

Once Starling & Monzo can offer bigger credit products then they’ll thrive I expect more. 

Chase has a long way to go to be honest - of course it’s backed by one of the biggest banks in the world but it still has a way to go to grab a foothold in the market it’s not just Starling, Monzo , it’s competing against U.K. legacy banks 

RG2015

How do Chase plan to make any money in the UK?

No overdrafts, credit cards, fee paying accounts, as yet. Just loss leaders.

sebtomato

400ixl said:

I don't see Chase having much of an impact on Starling at all. If that were going to be the case it would have already happened.

If Chase does not manage to grab a significant business in the next 12-24 months, then I can see them closing down the UK retail banking operation within the next 5 years. It's more make or break for Chase than Starling.

If Chase is not making much of an impact at all, why some many threads on this forum are talking about Chase rather than Starling (or others)? Clearly, there is a lot of interest (no pun intended).

 Why would it be "make or break" more for Chase than Starling? Starling is not part of a highly profitable banking group...

Surely, it's going to be more "make or break" for Starling if they don't become more profitable soon. How are they going to do that? Start charging customers for some services, while other banks are giving cashback?

sebtomato

RG2015 said:

How do Chase plan to make any money in the UK?

No overdrafts, credit cards, fee paying accounts, as yet. Just loss leaders.

I am sure they are working on those things. Starling is a loss leader too, having made hardly no profits since its beginning.

I have never paid anything to Starling, having been a customer for several years now, despite using the current account as my main account for spending (including abroad). How do they make money out of me? I don't have a credit card nor using the overdraft.