Thursday, March 23, 2017

Starling Bank: You can bank on them

Starling Bank is a fintech start-up based in the United Kingdom.  The bank is digital-only, meaning there are no physical banking centers that the company operates.  A customer keeps updated of their account balances and activity strictly through the app, currently out for iOS and soon to be released for Android.  By not having to build physical banks, the company plans to put that savings into customer focused endeavors.  Starling Bank is a “challenger” bank of sorts, challenging the traditional banking model.  As of now, they are simply offering banking services, but have plans to expand and incorporate additional financial services into their model.  Customers of the bank receive a card after they have applied for and have been accepted for an account. 
                Security with the app is stressed by Starling.  They have implemented a 6-10 character passcode, and have gone so far as to include a voice biometric identification within the security services.  Customers are able to set-up regular payments for certain items, and can easily track spending through push-notifications for the “Starling-Pulse” feed.  This new-age kind of app experience is exactly what younger consumers are looking for.  Being able to easily track spending, and receive notifications of purchases gives customers a sense of security in knowing they will spot when fraud is happening with their account.
                Starling has many plans to expand.  Right now they have their sights on integration with other platforms, and have started the process with partnering with TransferWise, a mobile currency exchange app.  This is the new wave of technology that is going to disrupt the banking system.  Having to go to the bank and physically deposit a pay check is going to be something of yester-year.  It seems as if checks are even a bygone form of payment with the prevalence of direct deposit and venom.  There exists so much potential for a start-up like this.  I like the fact that the company also realizes their potential, and are keeping their platform very open to expansion.  They do not want to be closed-minded and do one simple thing, albeit very well.
                The card they are distributing to their customers is not only able to make purchases in the U.K., but also throughout Europe.  For business travelers and travelers in general, this is a major breakthrough.  Corporations will be able to keep separate spending accounts for their employees who must travel, and will be easily able to track spending, and won’t have to worry about exchanging currency or large fees.  It truly excites me to read of a technology like this.  It is evident that Starling Bank is not trying to take over the banking sector through their openness to collaboration and integration with other services.  Fintech start-ups with regards to investing, taxes, and saving for retirement would be perfect candidates for integration with this platform.  I believe that a start-up like this has exponential potential, and I hope that something similar is in the works in the United States.    


Bryce Carrasco said...

I agree with the idea that the biggest emphasis needs to be placed on security and transcending a secure feeling into the minds of consumers so they are not hesitant towards this new system of banking. There will certainly be the portion of the market that will be resistant to switch from traditional banking to this new revolutionized type of banking. I am interested to find out the details regarding the financial services and true realm of capabilities that Starling can provide for consumers. I think that the ability to convert different currencies instantaneously is a huge break through and is a differentiating factor for Starling. I would also like to know how this software is different and superior to the mobile banking apps provided by the major banks that already consist such as the Chase bank and bank of America online banking apps. Bank of America offers an app for customers to do electronic transfers of funds along with other actions regarding their accounts, so the key is offering capabilities that it offers that are differentiating it from the major banks. That is a major challenge along with persuading the public that this application software is secure and trustworthy for customers to use as their primary form of banking transactions.

The potential for Sass companies is increasing in the global marketplace and reducing barriers of entry for smaller firms that do not have the resources or capital comparable to the bulge bracket banks. Software companies offer a lot of upside because ultimately their products are not capital intensive and require less investment in their business cycle. If Starling can successfully integrate their services in the existing market and attract customers from the traditional banks I believe that the sky is the limit for Starling.

Jacqui Schmidt said...

Mobile banking and mobile payments are becoming a large part of our world. Currently, the United States is just starting the new mobile world with things like Apple Pay, PayPal, Venmo, and online banking. This concept of mobile banking and payments is still very new and the majority of users, who are taking full advantage of this technology, are 20-something workers and college students. Many older individuals question the safety and trust-worthiness of giving out bank information; younger users seem to put forth their trust because the convenience outweighs any potential risk. One way we can foresee this new future, including the benefits and safety, is by simply looking outside the United States.
The rest of the world would be bored by our position in the mobile payment world. In an article published by Jacob Davidson he points out that, “In Hong Kong, residents regularly pay for goods, services, and public transit, all without swiping or signing. Instead, shoppers can simply wave their Octopus card, which uses a technology similar to Apple Pay, at checkout and go on their merry way.” Users are not just the younger crowd; Davidson points out that in Hong Kong users are between the ages of 16 to 65. “Even more impressive, the card's swipeless technology has been incorporated into phones, and yes, watches too. When did this magical future tech launch? Hong Kong has had Octopus since 1997,” Davidson exclaims.
Even developing countries like Kenya are extremely ahead of the United States. So many wonder, ‘Why is the United States so far behind on this technology?’ There really is no right answer. Most say it is hard to initiate because customers do not want a product that merchants do not accept and merchants to not want to spend money on a product that customers will not use. It is hard to justify creating a new way of doing things when the old way still works.
Another interesting point is that most of these mobile payment methods developed as a means to fix and problem and was not created to start the revolution of mobile payments. For example, Japan started using the Octopus Card as way to pay lower subway fares. Venmo began as a convenient way to payback friends. Now Venmo is starting to be accepted by merchants.
There is no 100% guarantee that mobile payments are safe, but there is no 100% guarantee that credit cards are either. Mobile payments offer a new world of simplicity and convenience that many older users might not accept and therefore will not adapt. Although, as time goes on in the U.S. it is clear that mobile payments and banking will be the new way of conducting transfers and payments.

matt cannon said...

After reading the article I realized that Starling Bank is a type of company I had no heard of before. I have obviously heard of banks before but never a bank where there is no actual physical bank and it is all done online. It is a new idea and I am unsure how effective it will be for a few reasons. The human aspect and physical aspects of banks play a major role in the banking services. Sure more and more banking can be done online but still banks have a big presence with their establishments. A lot of banks serve as safety deposit box holdings and it’s where a lot of people like to hold valuable items like social security cards and passports. I am not sure how Starling will be able to provide anything like this or along those lines. Banks also serve as a place for people to get notaries for certain works of paper. If they have no establishments they will not be able to provide notary services. Another issue is that when people have questions about documents or what to do there is nothing better than face to face service. Sure Starling will have a customer service line but that just won’t do it. You can’t solve a lot of issues over the phone and just having that type of customer service isn’t really valuable. I think this can result in a lot of issues for Starling.

I think it is a cool and innovative idea to have something like this but at the same time I just don’t really see how effective it could actually be. A lot of well established companies already offer online and mobile banking and I don’t see any reason why someone would choose Starling over banks they have had in the past or banks that already have good bank reputations as well. I also think that if the company really wants to be successful they should try and attract as many customers now and then start building establishments. I think if they build their name and draw attention they can get the popularity needed to break through a very dominant banking industry. In order for them to compete and prosper in the banking industry a physical presence will be crucial.