Anne Boden is not your typical fintech entrepreneur. In an industry bursting with young men in gray hoodies and designer sneakers, she is a woman in her sixties, always wearing brightly colored clothes.
She is unusual in another way. Starling, the online bank she founded, is making a profit unlike most of its rivals in an industry where huge losses are seemingly paraded as a macho badge of honor.
Boden is living proof that, despite ageism and sexism, a middle-aged woman can succeed in the grueling business world. In 2014, aged 54, she became the first British female entrepreneur to start a new bank.
Eight years later, Starling has three million customers and has now broken through with a profit of just over £32 million.
Proud: Anne Boden says she has shown that banks can offer free checking accounts and still be profitable
“This is a big moment for me,” Boden says, “I’m proving a point. When I knocked on the door to raise funding in 2014, I said it’s possible to build a bank with great service and free checking account banking — and be profitable.
‘You don’t have to rip off customers, you can be honest. I’m really proud.’
In its latest round of financing this spring, it was valued at £2.5bn and is looking to go public once the markets become less twitchy.
Skeptics worry it’s too good to be true. Rivals murmur that results have been boosted by grants and Covid loans.
Fintech valuations soared during the pandemic, but have taken a major dent in recent times. The real test of Starling’s mettle will come when the economy goes through tough times in the coming months.
For now, however, it has achieved profitability that has eluded competitors. How is that possible?
Starling makes a high return on capital, Boden says, due to its low fees and the fact that customers hold “pretty high balances” in their accounts.
Building her own technology platform “gave us a huge strategic advantage,” she adds. And she rejects claims by traditional banks that free checking accounts on credit are loss leaders.
“They’ve been saying for years that they can’t make money on checking accounts. But we have a free current account, we make money and provide 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 radiates warmth and friendliness.
An only child, she grew up in Swansea, her father was a steel worker and her mother worked in a department store. But beneath the friendly exterior hides granite determination.
She was in debt of £1 million and sold her house while she was founding Starling. She also survived a coup attempt by a much younger male colleague, Tom Blomfield, co-founder of rival Monzo.
While she has been steaming ahead with Starling, he stepped back from Monzo last year. “I don’t think about Tom that much these days,” she says.
There have been other confrontations. The former government’s anti-fraud minister, Lord Agnew, claimed Starling was ‘one of the worst’ for properly auditing companies borrowing under the Covid repayment scheme.
Government estimates suggest taxpayers could face a £17bn black hole from fraud and corporate collapses linked to the loans.
There were reports that she was planning legal action. “We’re not suing Lord Agnew,” she says. “But we were very surprised by what he said. He’s wrong. If loans have gone out to people who have defrauded us and the taxpayers, we will do our best to get that money back.”
Apart from the other banks, she is increasingly concerned that customers will become victims of scammers.
She put a stop to ads on Facebook and Instagram in December last year, as long as the platforms host ads targeting victims. ‘Why should a social media platform monetize fraudsters’ ads?’ she asks.
Has she had support from other banks who also refuse to place ads on Facebook parent Meta? “We’ve taken a one-sided stance because we think it’s right,” she says. “If social media and telecom companies, banks and law enforcement do not work together, we will not solve the problem.”
The eyebrows raised after Starling withdrew its application for an Irish banking license as a basis for expansion into Europe, after a four-year application process.
It was “no longer a top priority,” she says. “We were invited to get the permit, but we came to the conclusion that it was probably the wrong approach.” She says her primary goal is to focus on Engine, her banking software platform.
“Everyone wants our technology now. Engine makes it available to other banks around the world.” Has she made any deals yet? “We’ve had a lot of conversations in the United States and I’m leaving for Australia in September.”
As for the cost of living engulfing the UK, she says: ‘We don’t see a lot of stress on our customers at the moment.’
However, account holders spend about 10 percent more on energy bills and cut back on subscriptions. “They spend 15 percent less on entertainment than they did in February,” she says.
But the savings that have been built up during the lockdown have not been exhausted. The piggy banks are getting even bigger – with £600 million at Starling, she says. “The crisis will affect the most vulnerable who have never had savings.”
The digital bank is not immune to the ramifications hitting the tech sector, devastating valuations from companies like buy now, pay later empire Klarna.
Asset manager Jupiter recently lowered the value put on Starling’s assets. But Boden says her bank is well positioned because it is profitable and does not need to raise large amounts.
Part of the £130.5m raised in the spring is earmarked for more acquisitions following the first purchase last year, a £50m deal to buy Fleet Mortgages.
“We’re in a great position, never having to raise money again unless we want to,” she says.
Backers include Austrian-born investor Harald McPike, Goldman Sachs and Merian Global Investors. Boden owns a sizable 6 percent stake, so her fortune is at stake if things go wrong. An IPO could be a big reward for Boden. “It could be late next year when the markets warm up again,” she says.
She also leads a task force to encourage more female-led tech companies. “Did you know that if a female company gets female support, they are less likely to get the next round of funding? Investors don’t think it’s real financing if women support women.’ She rolls her eyes.
Which is the more sexist industry, banking or technology? She pauses before saying, “Tech.”
“It’s really great to have female leadership for all female customers and for all women who work in banks,” she says. “It’s changed, but not enough. It is still very much dominated by men.’
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