Finance Breaking news A tale of two banks: Monzo vs Starling last financial news
Breaking-Finance.Com - While other digital challengers struggle to keep afloat during the pandemic, Starling Bank says it remains on course to reach profitability by the end of 2020, overseeing significant growth in staff, customers numbers and its loan book over the past year.
Breaking-Finance.Com - While other digital challengers struggle to keep afloat during the pandemic, Starling Bank says it remains on course to reach profitability by the end of 2020, overseeing significant growth in staff, customers numbers and its loan book over the past year. In an investor letter sent to customers, Starling chief Anne Boden says: "When we closed our financial year at the end of November 2019, 926,000 retail accounts had been opened and 82,000 business and sole trader accounts. We held just over £1 billion on deposit. Now, less than nine months later, we’ve opened more than 1.5 million accounts: more than 1.25 million retail current accounts, almost 200,000 business accounts for small and medium-sized enterprises (SMEs) and almost 90,000 euro and US dollar accounts. And, as of the end of July, we held more than £3 billion on deposit."Boden says he challenger is adding a new account every 35 seconds, with a typical active retail customer holding an average balance of around £1,500. For SME customers, the figure stands at £15,250 and £2,850 for limited companies and sole traders respectively.
. "Over this period, we’ve seen a big increase in our annualised revenue run rate since November 2019," states Boden. "It now stands at £80 million and we remain on track to hit break even by the end of 2020."The picture painted offers a stark contrast to the gloomy forecasts coming from rival challenger Monzo, which last month said fallout from the Covid-19 pandemic casts "significant doubt" on its ability to continue as a going concern after reporting a £113.8 million loss for the year. Monzo has grown through customer acquisition but continues to struggle to convert its hip young followers into fee-paying customers. While Starling has grown its employee base by 352 since the end of the last financial year - including a net increase of 147 people since the start of the lockdown - Monzo has been forced into a retreat, laying off 285 staff and furloughing a further 295. In a clear dig at the plight of her rival, Boden says the coronavirus emergency has "focused minds in the fintech sector on business models and exposed those without a clear path to profitability. "I’m reminded of what Warren Buffet said at the time of the financial crisis, 'Only when the tide goes out, do you discover who has been swimming naked'.”
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