In a recent move to cater to more customers, Starling announced its new personal loan products. Its first personal loan products are designed to offer customers access to a flexible financing option; a small loan in particular.
In a recent move to cater to more customers, Starling announced its new personal loan products. Its first personal loan products are designed to offer customers access to a flexible financing option; a small loan in particular.
A Big Move Forward
Starling is trying to expand its market reach by making its services more accessible. The branchless bank can be accessed online or through the company’s mobile apps. The move to introduce personal loans as part of the company’s services is a step in the right direction.
Their personal loan is designed to be accessible. Customers can borrow up to £5,000 for various purposes without having to go through the (usually) complex process of applying for a personal loan. Everything is done digitally.
Customers also have extra flexibility when it comes to fine-tuning the personal loans they use. The loan repayment date can be set accordingly, and there is an option to stretch the loan over a certain period of time.
“Our spread-the-cost loans offer a structured repayment schedule, giving customers greater flexibility and control of their money”, says Stuart Leak, the head of lending at Starling Bank. It is clear that the loan is designed from the ground up with the customers in mind.
The loan is also connected with Starling’s own overdraft feature. Customers who are already approved for a Starling overdraft can apply for the loan just as easily. Since a personal loan is more affordable than overdrafts, it is a great option for customers too.
A Response to Market Growth
Starling Bank’s move to introduce its personal loan products is not without its reasons. The market for personal loans and short-term financing has been growing at a staggering rate. More services are being offered by both conventional and digital banks, including some of Starling’s biggest competitors.
A new additional in the market when it comes to personal loans is iLoans. Unlike other personal loan products, iLoans is meant to be used to fill small financial gaps; this is something that many people face with their monthly budgets. iLoans is a broker that lets customers borrow up to £5,000 within minutes thanks to its streamlined online loan application process.
The personal loans from iLoans can be extended for up to 36 months, with a minimum loan term of 3 months. The minimum amount customers can borrow is also very low, currently set at £100, which means the personal loan suits home users who need smaller loans perfectly. It’s very ideal for customers as they do not perform a credit check.
The application process of Starling’s new personal loans isn’t as streamlined as that of iLoans; this is an adaption they have made through experience and better understanding of the customers’ needs. There is no paperwork to file and the application workflow is protected using multiple security measures from start to finish.
A Digital Ecosystem
Whilst specialist online providers like iLoans are leading the personal loan market, the main competitor of Starling is Monzo, another digital bank based in the UK. Similar to Starling, Monzo also targets unbanked customers in the UK with their current account and financial services.
In a recent announcement, Monzo moved to make overdrafts and loans available on their platform. Experts believe that the move sparked Starling to respond with their own product line-ups. The competition between these two digital banks are beneficial not only for the market as a whole, but for customers as well.
Customers now have more options when it comes to digital banking. They can choose the services they use the most and find a digital bank whose fees suit their budget better. On top of that, the user experience offered by these two digital banks also varies.
Monzo, for instance, puts more emphasis on budget and personal financial management. It recently brought the same set of features to business users by introducing a business account. Similar to Starling, Monzo also offers payment processing for business customers.
Starling, on the other hand, focuses more on simplifying the features and services they have on the mobile app. Even business banking features from Starling are designed to be straightforward and easy to use. On top of that, there are no monthly fees or long waiting times to worry about.
As an addition to this growing digital banking ecosystem, both competitors introduced their version of a joint account, allowing customers to share expenses and handle financial challenges – such as budgeting for the entire family – easily.
Banking as a Platform
Starling also announced its Banking-as-a-Platform API, which enables access to banking and payment services through API calls. The platform is meant for business customers in the financial industry who want to integrate banking with their products and services.
A financial planning service with plenty of loyal customers, for instance, can offer banking and financial services via Starling’s new API that are completely integrated with their own loyalty program or membership system. Further integration can be made possible with the API in place.
Starling has also developed its own marketplace for businesses, which already integrates additional products such as insurance and retirement planning. The introduction of Starling’s new API solidifies the bank’s position as a market leader in integrating the financial industry.
These two announcements were seen as responses to other competitors expanding their line-ups of products and services. Nevertheless, the big shift towards branchless banking continues to attract more consumers.
As the competition heats up, expect to see more features being announced by Starling. Plans to add more features for business users are already in place, while individual customers will soon benefit from a more fluid user experience and better pricing structure.
