The Open Banking Interviews: Helen Bierton, Head of Banking, Starling Bank
Helen Bierton is Head of Banking at Starling and as I was conducting Open Banking Interviews, I thought it is important to also have the voice of a challenger bank in there. Starling Bank is an atypical challenger: they do not serve a niche customer base, nor do they concentrate on a niche set of products. They serve consumers as well as SMEs and even payment institutions and banks. If they don’t offer the service or product you need as a customer, you will likely find a partner on their Starling Bank Marketplace that does.
Part V of The Open Banking Interviews (see part IV, with Karin Van Hoecke, General Manager Digital Transformation, KBC Bank & Insurance Belgium).
Starling Bank is known for its wide range of financial services, sometimes provided by Starling, sometimes by its partners on the Starling Bank Marketplace. It makes Starling a true frontrunner in Open Banking. How did that journey go in times when other banks were still exploring their way in the world of APIs?
We think it’s about doing some simple, easy steps and then listening to what customers want. We were the first bank in the UK to release a suite of tools (APIs) to allow third parties to get their ideas off the ground. And at its heart, the marketplace aims to provide access to the best financial products and services, with control, choice, and visibility for consumers, all from a banking app. We created Open Banking APIs a couple of years ago and exposed those to third parties so they could integrate. It is really straightforward technology, a very straightforward implementation approach and we just made that accessible.
We had a number of partners that were able to integrate with us, our APIs are incredibly easy to work with and provide simple, secure access to data which is invaluable for businesses, of course as long as the user has provided consent. This is great testing grounds for businesses aiming to deliver the best financial products and experiences.
For us, the key is, because we are not built on legacy and because we can make decisions really quickly, we ended up being in a position where we have fast and stable deliveries. That’s a pretty good position to start from in the market today.
How do you see Starling Bank evolve: towards more services through partners or rather more production by Starling Bank that is provided on third-party platforms? Or perhaps both in parallel?
We think it is a mix of both. We have partners on our platform and marketplace of course but we will also be developing our core proposition. We are a bank, directly connected to key payment schemes and that is absolutely critical to what we are doing.
That is where our strategy is: partnering, but also building on our core capabilities to fulfill the needs of our customers.
A good example of this is how we are developing the marketplace for businesses. On top of providing a business account for free to small businesses, we offer valuable features designed to alleviate the pressures of running a small business on the marketplace. We now have a partnership with FreeAgent, the accounting software, as a response to customer demand, following our integration with Xero last year.
Starling Bank is one of the only full-fledged challenger banks. You do not only provide services to consumers and SMEs, but also to other financial institutions and Fintech. How has the Open Banking evolution played a role in the beginning when choosing this path?
The mere fact that Open banking could generate £18bn in value for UK SMEs and citizens, means it has a big part to play in the future of financial services.
For Starling though, we have always had a clear vision for the bank and what we are trying to do. We listen to what the customer, i.e. consumers, businesses or e-money institutions, are wanting and then look about building that out in a holistic manner that is connected. We have consumer banking and SME banking, which are obviously connected. We have banking services and payment services which underpin both of those. So for us, it was a natural one after the other flow of steps to deliver.
I understand, but retail and SME banking are something completely different from serving other financial institutions, isn’t it?
Indeed, they are entirely different, but inherently we are serving a broad range of customers with the same technology, it’s the same approach in the sense that we approach all aspects of banking asking the same question — how can this be better? Yes, we have a different servicing and a different compliance regime, but that is because the goal is different.
We also work in an ecosystem, there is a great deal of benefit empowering the retail consumer with better, more straightforward banking capabilities because that in turn will help reduce the barriers to entry for financial literacy and wellness.
This creates a greater demand for Fintech products and services that assist with this. If we are also helping to improve the services of financial institutions or corporates our contribution has a further ripple effect, enabling the businesses they interact with and benefiting the customers they serve.
Looking at the future, what do you see as the key trends for 2020 and beyond for consumers?
We definitely see Open Banking playing a major role, more than 33m people are expected to have signed up to open banking driven services by 2022. But account aggregation may not be the solution that every consumer is waiting for. By being open and accessible to people we create the opportunity to connect with us, to integrate with us and that becomes incredibly exciting.
We think it is more about providing all the ingredients for someone else to make the cake. That is what we are doing really well at the moment. We provide the ingredients in terms of access to the payment systems, Faster Payments, real-time payments. We have APIs to enable people to access bank accounts, to build apps.
We think it is more about providing all the ingredients for someone else to make the cake. Exactly how you as a chef make that cake, what that cake is like, is completely up to you. We are not going to dictate that.
We’re also passionate about what Open Banking means for people on an everyday level and how this impacts the way we see money. So while things like our marketplace provide a great place for consumers to try and test the ‘ingredients’ making up their cake; we also have a vision of helping customers to make better financial decisions by virtue of having better insight into their finances and a way to filter the choices out there.
Do you see any difference when it comes to SMEs for the future in Open Banking?
There are different products but it is all based on the same technology. For example, our APIs create an open environment and this increases competition which in turn levels the playing field for SMEs. It is also worth saying that a lot of these SMEs, especially the small ones, are an individual in their own right. So what their expectation is, and what services they require could be transposed between SME and the consumer, without a doubt.
It is easy to put SMEs and consumers in different buckets, but they’re not. Just a little example: we were the first bank in the UK to offer Apple Pay to SME users because that is how they want to pay.
Today we see more and more payments becoming invisible. How do you see this evolve in the near future of mobile and voice commerce and even the Internet of Things?
We think that micropayments are more of an evolution rather than a revolution. Consumers are getting more comfortable with things or devices making payments for them. But it is crucial that as payments become easier or more seamless to make, customers must be informed about this new way of paying and its implications.
A big part of Starling’s mission is to make banking more accessible and payments more visible, so we see it as a responsibility to help our customers navigate this as the world evolves. As a bank we need to provide consumers the right reassurance, and offer them tools for easy refunds for payments made by mistake for example.
“Payments should be made easy, but customers should stay in control of their consumption,” Visa states that the industry should provide the right tools to consumers to ensure that. Do you think banks are uniquely positioned to provide these services because they have a higher interest than just providing payment services?
One of the challenges posed by micropayments, or invisible payments, is that they are processed by us — as a bank, but not initiated by us. However, the way Starling looks at this issue is that everything about how our banking app is built is designed to help customers stay in control of their finances. It’s about understanding the customer, and providing them with information that helps them.
And I do think that Starling is a different kind of bank, we understand fintech and are built on technology.
We place the customer at the heart of our offering so we do think we are uniquely positioned to provide the best possible services . Our open approach in areas like the Marketplace showcases that.
But also our Banking Services, which are powering the payments and account infrastructures of a number of market players — from agency banks to payment providers. These services are actually facilitating the idea that payments should be easy. We are also leagues ahead in terms of our transparency and future-proofing for consumers. These are important steps in providing control to consumers and providing greater protection for the payments they make.
This story is part of a series of interviews with executives of the financial services industry. More interviews can be expected in the coming weeks.