Original text here from Patrice Bernard (LinkedIn)
Having stepped down from her role as CEO at the end of last month, Anne Boden reflects in an interview with McKinsey on the journey of creating Starling Bank, which she led to success – and profitability – in less than 10 years. The vision she had at the outset remains relevant and could serve as valuable inspiration for the entire industry.
Throughout the conversation, Anne emphatically emphasizes that prior to embarking on this venture, she had a long career in banking technology, and it quickly becomes apparent that this experience is one of the keys to her success. Her knowledge of the state of technology in traditional financial institutions and their regular suppliers motivated her radical choice to build a platform from scratch, in order to control its future. Today, it has become a comprehensive offering.
More fundamentally, her approach has always been rooted in the deep conviction of the imperative to adapt finance to the "digital" era. When asked about their strategies in this regard, large financial institutions responded in 2008 (and some have not changed their attitude) that the priority was modernizing branches and deploying a mobile application. Yet what these companies needed was a revolution, starting with a new technical foundation.
Another observation that will resonate with many CIOs in 2023, provided their leaders show a minimum of honesty: they no longer have any confidence in their organization's ability to execute significant projects and drive change. The consequence is a deadly sclerosis that delays and ultimately rules out any possibility of meaningful transformation, even though it's essential when the banking environment and customers are undergoing constant and accelerating changes.
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Locked in their reassuring conservatism, these organizations fail to grasp, in particular, how what once seemed definitively impossible has now become, thanks to contemporary technologies, not only possible but often straightforward. For example, the risk manager convinced that producing a report requires a month of work and incapable of considering other methods is unaware that now, with proper tools, a day is sufficient.
Anne explains that she herself experienced this shock because she was burdened with the biases accumulated through her career in established companies and couldn't imagine doing things differently from what she had learned until then. To some extent, the entire operation of the bank must – and can – be reinvented. It's not surprising, under these circumstances, that few people believed in her dream of creating one from scratch in 2014. And in this regard, mindsets have made little progress.
The results speak for themselves: Starling has captured 2.4% of individual accounts and 10% of SMEs in the UK (in a context where some leaders have only 10% market share). And the recipe is clear. It is also shared, in my opinion, by BBVA, which, under the leadership of Francisco González (also from an IT background), was one of the few traditional institutions to challenge its culture and truly capitalize on technological advancements for the benefit of its customers.
In 2023, the story may seem old, but unfortunately, it still has not been embraced by most financial institutions. This failure leaves the door open to a generation of disruptors to which Starling belongs – they are not just targeting the populations overlooked by incumbent players but are seriously aiming to win over their existing customers with a naturally compelling value proposition.
