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Challenger bank Starling tops 1m accounts

·Senior City Correspondent, Yahoo Finance UK
CEO of smartphone-based bank Starling, Anne Boden attends a session at the Paris Fintech Forum  in Paris on January 30, 2018. / AFP PHOTO / ERIC PIERMONT        (Photo credit should read ERIC PIERMONT/AFP via Getty Images)
CEO of smartphone-based bank Starling, Anne Boden. Photo: ERIC PIERMONT/AFP via Getty Images

Digital-only challenger Starling Bank has passed 1m accounts, Yahoo Finance UK can reveal.

Founder and CEO Anne Boden confirmed to Yahoo Finance UK on Monday that the startup had passed the milestone.

“When we started Starling our 5 year target was 800,000,” Boden said. “Now we are at 1m and looking forward to the next million.”

Boden founded Starling in 2014 as an app-only bank meant to challenge the traditionally dominant high street lenders. The bank is one of a number of fast-growing, app-only challengers that have been set up in Britain in recent years.

The milestone makes Starling one of the biggest digital challengers behind Monzo and Revolut, which doesn’t actually have a banking license but offers banking services. Monzo has 3.3m customers in the UK and Revolut, which operates across Europe, has over 8m customers.

READ MORE: Millennials and Gen Z embrace 'multi-banking' with several accounts

Starling has focused on business customers more than rivals and Boden said it now has over 80,000 companies as customers.

Boden appeared as a speaker at the Fintech Talents conference in London on Monday and warned in a speech that many challengers who have emerged in recent years have unsustainable business models.

“We have a whole movement with new banks coming to market to address specific customer needs,” Boden said. “But the banks, the new banks as opposed to just fintechs, have a path to profitability. Unfortunately, lot of the new entities coming to market that are not banks don’t have a way of actually generating revenue. Unfortunately, they do not have a long term profitability plan.”

Starling raised £30m ($38.6m) last month that it plans to spend partly on expanding into new countries, with the Republic of Ireland high on the list.

Starling’s last publicly disclosed customer deposit total was £800m but Boden said it expected to hit £1bn in the coming weeks.