Starling Bank: Focus on customer experiences is delivering profitable growth

Starling Bank has reported a third year of profitability, as its CEO claims that its focus on customers sets it apart from others in the banking sector.

The digital bank hailed its third year of profitable growth for the financial year ended 31 March 2024. It saw its profits before tax grow 54.7% year-over-year to £301.1m.

Growing profitably has been a major goal for many digital banks. Earlier this month, rival brand Monzo generated its first profit for its financial year ended 31 March 2024. However, Monzo’s profit of £15.4m is around 20 times smaller than what Starling generated for its financial year.

Starling also grew its revenues versus last year, generating £682.2m in revenue, versus £452.8m in the year prior. Its active customer base also increased by 17.8%.

The company’s interim chief executive John Mountain connects Starling’s profitable growth in the year to the experience it provides for consumers.

“We grew by attracting more customers in a competitive market because we deliver great experiences,” he said, writing in the company’s annual report.

The “great experiences” include those delivered on app and through its customer service agents. He also cited Starling’s interest-generating current accounts, its “intuitive in-app tools”, and fee-free international card use as differentiating what it offers its customers.

Digital banks like Starling and rival Monzo have disrupted the UK banking sector, and posed serious competition to the traditional high street banks within the UK. Mountain said he is often asked whether Starling can continue to be as disruptive as it has been, given that the traditional banks have been working hard to react to the arrival of digital banks.

Starling Bank launches fresh brand platform as its priority shifts to driving salience

“My answer is always ‘yes,’ because the fundamentals that created the opportunity for Starling remain true,” he stated. “Legacy banks – the term ‘high street banks’ becomes less relevant as they close branches – are still grappling with poor customer service, costly organisational complexity and ossified technology.”

By contrast, Starling is well-equipped to meet these challenge, he said, citing Starling being chosen as banking brand of the year by consumer group Which?

In its most recent financial year, Starling also launched a new brand platform ‘The Bank Built For You’, designed to demonstrate the bank is built around “real human needs”. The business’s marketing spend increased by around 20% versus the year prior to £35.99m.

The new platform also signified a move to drive brand salience and consideration from Starling, Rachel Kerrone, Starling Bank’s brand and marketing director told Marketing Week, speaking in January.

According to YouGov BrandIndex, Starling increased its consideration considerably in the last financial year. Its consideration rose from 7.9 in the year ended 31 March 2023, to 10.1 in the year ended 31 March 2024.

Its overall brand health also increased significantly in the period, according to YouGov, with its index score rising from 5.1 to 6.7. This means it is now nudging ahead of traditional bank HSBC, which is the second largest UK bank by number of customers. It is also rapidly gaining on Barclays’ brand health score of 7. Rival digital bank Monzo is still outperforming Starling in terms of brand health, with a score of 9.