Though many digital banks spawned in recent years disrupting the traditional banking system, none of them turned any profits, until now. UK-based Starling Bank has become the first such challenger bank to report a profit.
The digital bank announced on Friday that it turned a positive operating profit of £0.8 million in the month of October, or £10.1 million on an annualized basis.
“Today, I’m pleased to say that Starling has become the first of the new breed of digital banks to become profitable,” Anne Boden, Starling Bank’s Founder and CEO, stated.
According to the latest figures, it has around 1.8 million accounts, with £4 billion in deposits and £1.5 billion on its lending books.
It generated £9 million in revenue in October, projecting an annualized run rate of £108 million. The bank detailed that £5.5 million of its total monthly revenue came from net interest incomes, while the rest, £3.5 million, was generated from gross fees and commission income.
While the operating costs of the bank increased by 30 percent last year, its fixed costs remained flat. The customer accounts of the bank also doubled in the period.
Challenging the Big Banks
Founded in 2014, Starling bank is a digital bank operating in the United Kingdom and offers retail, business and trader accounts.
“I’m equally certain that we will become a formidable competitor in the European banking market as we gear up to scale across Europe,” Boden added. “We know that our technology is hugely scalable because our tech team runs a constant simulation at around ten times our current capacity. We’re prepared for a sudden influx of customers and transactions.”
While Starling reported profits, the UK’s largest challenger bank, Revolut, was still bleeding money for capturing the banking market. Earlier this year, it revealed that its administrative costs tripled in 2019 to £270 million, along with an operating loss of £107.4 million.
Though many digital banks spawned in recent years disrupting the traditional banking system, none of them turned any profits, until now. UK-based Starling Bank has become the first such challenger bank to report a profit.
The digital bank announced on Friday that it turned a positive operating profit of £0.8 million in the month of October, or £10.1 million on an annualized basis.
“Today, I’m pleased to say that Starling has become the first of the new breed of digital banks to become profitable,” Anne Boden, Starling Bank’s Founder and CEO, stated.
According to the latest figures, it has around 1.8 million accounts, with £4 billion in deposits and £1.5 billion on its lending books.
It generated £9 million in revenue in October, projecting an annualized run rate of £108 million. The bank detailed that £5.5 million of its total monthly revenue came from net interest incomes, while the rest, £3.5 million, was generated from gross fees and commission income.
While the operating costs of the bank increased by 30 percent last year, its fixed costs remained flat. The customer accounts of the bank also doubled in the period.
Challenging the Big Banks
Founded in 2014, Starling bank is a digital bank operating in the United Kingdom and offers retail, business and trader accounts.
“I’m equally certain that we will become a formidable competitor in the European banking market as we gear up to scale across Europe,” Boden added. “We know that our technology is hugely scalable because our tech team runs a constant simulation at around ten times our current capacity. We’re prepared for a sudden influx of customers and transactions.”
While Starling reported profits, the UK’s largest challenger bank, Revolut, was still bleeding money for capturing the banking market. Earlier this year, it revealed that its administrative costs tripled in 2019 to £270 million, along with an operating loss of £107.4 million.
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