Is Starling dead now?

sebtomato

400ixl said:

You misunderstood what Amazon were doing. They were building a platform business, it wasn't about driving others out of business. It was about creating the market place where they controlled the narrative. AWS as a compute platform was the bonus side.

That is exactly what Starling are looking to do. They want to be the platform that future digital services are built upon and use to conduct business. You are fixated on Starling as a retail bank and can't see the big picture at play here. If you were talking Monzo, then you may have more of a case, but Starling are not what you appear to think they are.

No, Amazon never started as a platform business. It started as a retailer. The marketplace and AWS came much later on, so were never the initial intent.

Amazon retail is the perfect loss leader example (getting rid of competitors), but the key word here is to become a leader, else you just make losses, which is bad business.

If Starling strategy was to build a banking platform as opposed to a retail bank, as you keep saying, why have they spent so much money building features relevant to retail customers, and acquiring retail customers like me? Not a leader, but surely making losses.

Maybe they are changing strategy now, and want to become a leader in B2B, to resell the technology they have built (a bit like Ocado), because they have realised retail is too competitive, features alone will only bring them so far and they are not making money from retail customers or dormant accounts.

400ixl

It started as a book retailer, the platform business was to move into other markets outside of books where they would become a marketplace as well as the retailer. That was the strategy, building the platform was a big part of the costs which meant they weren't profitable (alongside as you say their very thin margins) for quite a while.

Starling are not changing strategy now, it has always been the strategy. The retail bank was part of the strategy, the platform was built to run that business as customer number 1.

I am going to bow out here, you clearly have your view that you want to be correct regardless of what anyone else tells you. You almost sound like you work for Chase and need to defend them to the hilt. I have a background in working with Fintech's and Consumer / Retail customers on their technology strategies. Both Chase and Starling will survive and will look very different in 5 years time.

I wish you a good evening.

sebtomato

400ixl said:

It started as a book retailer, the platform business was to move into other markets outside of books where they would become a marketplace as well as the retailer. That was the strategy, building the platform was a big part of the costs which meant they weren't profitable (alongside as you say their very thin margins) for quite a while.

Starling are not changing strategy now, it has always been the strategy. The retail bank was part of the strategy, the platform was built to run that business as customer number 1.

I am going to bow out here, you clearly have your view that you want to be correct regardless of what anyone else tells you. You almost sound like you work for Chase and need to defend them to the hilt. I have a background in working with Fintech's and Consumer / Retail customers on their technology strategies. Both Chase and Starling will survive and will look very different in 5 years time.

I wish you a good evening.

And you sound like you work for Starling. As for Amazon, initial strategy was not about building a platform, but things can change. Bezos didn't envision what would actually make him money in the future.

Yes, Chase being a subsidiary of JP Morgan will survive whatever happens. I don't work for them.

But my thread was mainly about retail: is Starling "dead now" as a retail bank? Is it going to lose many customers to Chase?

[Deleted User]

RG2015 said:

Daliah said:

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.

This is almost certainly one of the questions the JP Morgan shareholders have been asking, and to which they don't appear to have received satisfactory answers so far.

Yes, and thanks for the link to the Times article.

I have dealt with JP Morgan in the past and their position in the UK was very much high end personal and corporate. Therefore their experience within the UK retail sector is limited.

This added to the current UK tradition of "free" banking being alien to most other countries, especially the US, will demand a pretty steep learning curve.

This comes up in these forums time and again - you do get 'free' banking in other markets including the US - it generally requires a minimum balance or direct deposit of salary. 

I wish Starling well as an innovator but most, if not all of it's functionality could be replicated elsewhere. It would also be interesting to see which of it's extra free functions actually make revenue e.g. free Euro account with free Euro ATM withdrawals. 

Thrugelmir

Doshwaster said:

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.

How many US lenders remained in the UK mortgage market after the GFC in 2008 - Zero. 

Metrobank launched to a fan fare in 2010.  Now it's model looks outdated. 

Not everyone needs an App based bank. Some prefer the option of access to a branch. As and when required. 

sebtomato

Thrugelmir said:

Metrobank launched to a fan fare in 2010.  Now it's model looks outdated. 

Not everyone needs an App based bank. Some prefer the option of access to a branch. As and when required. 

I think Metrobank is still ahead of many traditional banks, opening late and 7 days a week for instance, and took market shares from those. 

Not everyone needs or wants an App based bank for sure.

Apparently, only around 8% of all personal current accounts are now with a digital bank such as Monzo, Starling or Chase, so a very small portion of the market. 92% of personal current accounts are still therefore with the traditional banks.

I am therefore surprised that a new comer on the market like Chase wouldn't try to also go after the traditional part of the market, creating at least a website, call centre etc., and would only want to compete within 8% of the market.

randompenitent

Starling *is* more than a retail bank - they sell "Banking as a Service" IT services to other financial services organisations. As a regular account holder, this has no effect on me and I don't particularly care, but it does mean they are attempting to be a platform business and perhaps have a more sustainable business model as a result.

They are also a platform business in a more customer-visible way as they have a "marketplace" for add-on offerings, which if you've used their app, you will have seen. I think this is interesting but it is not obvious to me that it's going to generate huge revenues.

And, as others have mentioned, Starling is now profitable, or at least cash-flow positive.

Starling seems to have pretty solid technology - not just a good mobile app but the back-end services that actually make the bank run - the software and hardware behind the scenes that manages payments and so on - and they have this running on modern technology, not a creaking, expensive, hard to maintain old mainframe like some banks I could mention. This is a big deal - the old banks are trapped with old technology that is expensive to run and hard to migrate from. There were rumours last year that various banks, including JP Morgan-Chase, had tried to buy Starling, probably at least partly because of this, but Anne Boden (the CEO) appears unwilling to sell. 

As for Chase investing to grab market share to get into the UK market - well, that's their decision. Acquiring customers is expensive and need to spend on sweeteners like high interest rates, or shiny new branches (Metro), or advertising, or some other freebies (airmiles, free foreign exchange, free share trading - take your pick). Running current accounts appears to be a profitable business, but the banks are pretty cagey about how profitable it is, but clearly you want to get customers to stay with you for a while, do lots of transactions, and in the traditional model, buy lots of other products (notably mortgages) from you. Running bank branches, on the other hand, is not profitable - or at least not profitable for most banks. Metro seems to think otherwise, but visiting bank branches is increasingly a fringe activity, and I suspect they are on the wrong side of history. Metro claims to make lots of money from customer safe-deposit boxes in branches. Really? Who knows.

Ballard

Now that I’ve opened a Chase account I have little use of either Starling or Monzo but I’ll keep them as backup for overseas spending.

@randompenitent makes a good point about services they offer to other banks. I know that they perform KYC checks on behalf of other banks if the customer places funds on deposit via a platform. I have no idea what fee they get for this but it must be worthwhile.

Neither Starling not Monzo will miss my handful of transactions a year but Chase now have my savings and I’ll be spending with them in the UK for the 1% too. 

adamp87

Ballard said:

Now that I’ve opened a Chase account I have little use of either Starling or Monzo but I’ll keep them as backup for overseas spending.

@randompenitent makes a good point about services they offer to other banks. I know that they perform KYC checks on behalf of other banks if the customer places funds on deposit via a platform. I have no idea what fee they get for this but it must be worthwhile.

Neither Starling not Monzo will miss my handful of transactions a year but Chase now have my savings and I’ll be spending with them in the UK for the 1% too. 

What will you do when the cashback runs out in 12 months time?

sebtomato

Ballard said:

Now that I’ve opened a Chase account I have little use of either Starling or Monzo but I’ll keep them as backup for overseas spending.

I think Chase is not too bad either on overseas spending, particularly in the US.

I will keep my Starling accounts dormant. My only real use for Starling for the time-being would be the Euro account.