The online bank singled out by a former government minister for the effectiveness of its anti-fraud measures has “onboarded” an average of 15,000 new customers per month during the Covid crisis, according to an analysis by the Observer.
Figures from Starling Bank’s latest annual report show the eight-year-old lender grew its business customer base from 87,000 before the pandemic to 330,000 business accounts last spring.
Banks are required by law to carry out rigorous checks on new customers to prevent fraud and money laundering.
Analysis of the bank’s annual report, confirmed by Starling, shows it took on as many as 243,000 new customers — an average of more than 15,000 per month — between November 2019 and March 2021. And that’s despite just 1,245 employees, only a fraction of whom would have checked for potential issues. .
The number of new accounts is much higher than for the UK’s biggest high street lenders. Sources from some of these banks confirmed that they normally accept between 1,500 and 8,000 new business customers per month.
Starling said he benefited from the Covid lockdown, when most major lenders closed their branches and struggled to meet demands from existing customers. The digital lender said its technology allowed it to onboard new customers, including those seeking government-backed Covid loans, at a pace that big banks relying on older technology would not have been able to. able to handle.
But the volume of new customers, as well as the increase in loans Starling has dispensed during the pandemic, have raised questions about its ability to carry out appropriate checks.
Last month the bank was accused by former minister Lord Agnew of failing to properly screen borrowers before making taxpayer-backed loans, although Starling chief executive Anne Boden has since threatened to to take legal action against the Tory peer for what she said. were “defamatory statements”.
Kevin Hollinrake, chairman of the parliamentary group for fair commercial banking, said Starling had some questions to answer. “Public scrutiny should always accompany public money. While I have yet to see strong evidence of inappropriate lending, Starling urgently needs to answer some very valid questions, including its current and future default and fraud rates on government-backed loans,” a- he declared.
Before the pandemic, Starling had loaned just £23m, excluding loans bought from other companies. By June 2021, according to a company business update, he had handed out £1.6bn in rebound loans. The scheme, introduced by Chancellor Rishi Sunak, offered up to £50,000 per customer. The loans were distributed by leading banks, which charge interest – albeit at a reduced rate of 2.5% – in return for distributing the money, but the taxpayer is required to repay 100% if customers are lacking.
Starling, which was founded by Boden, a former executive of the Royal Bank of Scotland and Allied Irish Banks, in 2014, said its systems were designed and built to regularly handle customer volumes at this level and more. Again. A spokesperson said it had “one of the best banking platforms in the world, which we built from the ground up” and that its systems “have been designed and built to routinely process customer volumes at this level. and more”.
Every loan application had been checked for fraud flags, Starling said, and it claimed to have more checks in place than most other lenders, and more than the program required. He said that, for example, he automatically checks rebound applicants against the Companies House register, checking the company’s start date.