Starling Bank losses doubled to £52m
Losses at the UK challenger, Starling Bank, doubled to £52 million in 2019 as the company hired hundreds of employees and focused on attracting new customers, according to The Telegraph.
The banking start-up brought in revenues of £14.2 million, a steep increase from the previous year’s revenues of £750,000.
Chief executive, Anne Boden, called 2019 a “transformational” year for the business and accused Starling Bank’s rivals of “swimming naked” without a route to reaching profitability in a letter accompanying the results.
Staff costs at the business increased to £35 million in 2019, up from £14 million for the previous year after Starling Bank nearly trebled the amount of full-time employees at the company.
The company had a total of 740 full-time employees by the end of 2019, up from 279 in 2018. The business has since grown to employ 958 people.
The business has raised £363 million, including £100 million raised so far this year.
The challenger has 926,000 personal accounts as well as 87,000 business accounts. It launched its first television advertising campaign in October.
Boden contrasted Starling Bank’s recent fundraising at its current valuation with rivals like Monzo, which saw its valuation slashed from £2 billion to £1.25 billion in a £60 million funding round earlier this year.
“While other fintechs may have struggled with funding and maintaining ambitious valuations during the pandemic, our existing investors continue to support us,” she writes.
Boden adds that the pandemic had “exposed” rival digital banks “without a clear path to profitability.”
Starling Bank’s growth targets for 2020 have been lowered, the company says, and Boden writes that the company’s plans to expand to Ireland would be “temporarily put on ice” during the height of the coronavirus pandemic.
The company has plans to expand internationally in 2021. It hopes to launch in Ireland, the Netherlands, France and Germany.
Starling Bank “has adequate resources to continue in operational existence for the foreseeable future,” the report says. This is in contrast to Monzo’s recent annual report in which the business warned of “material uncertainties” affecting its ability to continue to operate.
Monzo said last week that its losses rose to £113.8 million from £47.1 million while revenues increased to £67.2 million from £19.7 million.