The online bank pointed out by a former government minister about the effectiveness of its anti-fraud measures was “incorporating” an average of 15,000 new customers a month during the Covid crisis, according to the Observer’s analysis.
Figures from Starling Bank’s latest annual report show that the eight-year-old lender has grown its pre-pandemic business customer base from 87,000 before the pandemic to 330,000 business accounts last spring.
Banks are required by law to conduct rigorous checks on new customers to prevent fraud and money laundering.
The analysis of the bank’s annual report, confirmed with Starling, shows that between November 2019 and March 2021 it welcomed up to 243,000 new customers – an average of more than 15,000 a month – despite having only 1,245 employees. , only a part of which would have been checking for possible problems.
The number of new accounts is much higher than that of the largest lenders in the UK. Sources at some of these banks confirmed that they typically take in between 1,500 and 8,000 new business customers a month.
Starling said it had benefited from the Covid blockade, when most major lenders closed their branches and had difficulty keeping up with the demands of existing customers. The digital lender said its technology has allowed it to incorporate new customers, including those seeking government-backed Covid loans, at a rate that larger banks relying on old technology would not have been able to manage.
But the volume of new customers, as well as the jump in loans that Starling distributed during the pandemic, has raised doubts about its ability to make the right controls.
Last month, former Lord Agnew accused the bank of failing to properly review borrowers before delivering collateralised taxpayer loans, although Starling chief executive Anne Boden has since threatened to take action. against the Conservative couple for what he said. they were “defamatory statements.”
Kevin Hollinrake, chairman of the parliamentary group for fair business banking, said Starling had questions to answer. “Public scrutiny must always be accompanied by public money. While I have yet to see any firm evidence of inadequate lending, Starling urgently needs to answer very valid questions, including its current and future default and fraud rates on government-backed loans, ”he said.
Prior to the pandemic, Starling had only lent £ 23 million, not counting loans bought from other companies. By June 2021, according to a commercial update from the company, it had distributed £ 1.6bn in recovery loans. The plan, introduced by Chancellor Rishi Sunak, offered up to £ 50,000 per customer. The loans were distributed by street banks, which charge interest, albeit at a reduced rate of 2.5%, in exchange for distributing the money, but the taxpayer is required to repay 100% if customers are not obligated.
Starling, which was founded by Boden, a former executive at Royal Bank of Scotland and Allied Irish Banks, in 2014, said its systems were designed and built to routinely process customer volumes at this level and above. A spokesman said it had “one of the best banking platforms in the world, which we built from scratch” and that its systems were “designed and built to routinely process customer volumes at this level and more”.
Each loan application had been checked for signs of fraud, Starling said, and claimed to have placed more checks than many of the other lenders and more than those prescribed by the scheme. He said that, for example, he automatically checked the recovery applicants with the registration of the House of Companies, verifying the date of incorporation of the company.