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Starling has hit some speed bumps with its business banking proposition


Neobanks' Monthly App Downloads Are Declining Amid The Coronavirus Pandemic

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UK neobank Starling has run into some issues with its business banking proposition in the past few days:

It has temporarily stopped accepting new applications for sole trader business accounts. Starling announced via tweet on May 14 that it would not be opening any new sole trader accounts until June 1 due to record demand. It plans to focus on better serving existing sole trader clients in the interim. The spike in demand for Starling sole trader accounts might have been caused by buzz about the neobank’s fast start on disbursing loans through the UK’s Bounce Back Loan Scheme (BBLS): Starling lent out £90 million ($110.1 million) in BBLS loans in the first day and a half after it started accepting applications, and some struggling sole traders may have seen opening an account with Starling and applying for a BBLS loan as their fastest route to relief funds.
Business clients have been complaining of rejected applications for BBLS loans. Starling has faced a host of complaints from clients claiming their applications were declined without explanation, per AltFi, though it is worth noting that some customers may have failed the necessary fraud checks. The bank tweeted last Friday that it had processed 99.7% of BBLS applications and that the average time for customers to receive funding was 27 hours, but following backlash, Starling CEO and founder Anne Boden tweeted that the neobank had processed 75% of applications and had declined 16%, and that around 94% of customers got their funds within 24 hours of signing their loan agreement.

Starling has made a concerted push to elevate its status as a business bank during the coronavirus pandemic, so growing pains are far from unexpected. Starling has done just about everything possible to come out of the coronavirus crisis as a top-of-mind bank for businesses by supporting them in their time of financial need. In addition to becoming accredited as a BBLS lender, the neobank is accredited under another major UK relief loan program, the Coronavirus Business Interruption Loan Scheme (CBILS).

And it has also rolled out digital tools to further help businesses during the pandemic. With such a rapid flurry of activity to enable businesses and elevate its status as a business bank, growing pains were almost inevitable — the trick for Starling will be to ensure it can continue supporting new businesses in the longer term, for example by bolstering platforms to avoid crises like prolonged system outages or data leaks.

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