Starling plans to ‘come out swinging’ in diversification bid
Bernadette Smith has a spring in her step as she sits down in Starling’s headquarters to discuss her new role. The fintech’s new banking boss is buzzing with energy that she wants to pass onto customers and investors.
“I want everyone to be talking about us,” she says, envisaging how she will measure success in her new role.
Smith has been at fintech for over four years and in June she was tasked with leading the group’s central operation. She takes the reins of Starling’s banking activities where chatter is already high, though not for the right reasons.
The group recorded a three per cent drop in pre-tax profit to £217m in the last year, lagging behind the booming bottom lines of rivals. Revenue slipped 5.6 per cent on falling interest rates – a damning assessment of the bank’s diversification drive.
“I don’t want a dip in profit, I want a healthy improvement in profit” Smith tells City PM as she enters her sixth week in the job.
“If I could write the headline for Starling next year… it is we’ve made some changes, we’ve come out swinging with energy, and this is a consequence of that.”
Smith’s ambition is not without effort. Just over a month into the job, she says at least one product or feature has been launched per week – from travel e-sims to business expense cards.
“Momentum is really important to use – momentum and velocity signals to the market that interesting things are happening at Starling,” she adds.
The revenue test
Undoubtedly what Smith will be most judged for is her ability to swing revenue back into growth, and then some.
“I’d like to see revenue go up, driven by fee income,” she says.
As the Bank of England takes its slow and steady chop to interest rates, Britain’s challenger banks have turned to fee income as their growth lever of choice. The income stream offers firms more stability coming from a specific service, as opposed to interest earned on lending money.
Across the board, fintechs have moved thick and fast to diversify into this space. Monzo, which offers a weekly free Greggs sausage roll in its subscription services, posted a 39 per cent just in fee income to £459m in the last year. Meanwhile Revolut, where you can access Tinder Gold as part of the ‘Metal’ package, saw 67 per cent growth in its subscription service – outpacing that of headline profit.
But Starling stalled in the race to broaden its base, with fee income sitting flat for the year at £128.2m and making up just over 14 per cent of the group’s revenue.
Smith rejects that Starling has a diversification “problem” but adds “it’s something we want to address”.
“I would definitely want to see [fee income] go higher than 15 per cent… I know it’s incredibly important to us that we increase that… it’s going to be a key priority for me.”
Despite her lively start since inheriting the banking baton, Smith says anything in the fee area must be “really carefully thought out” and rejects “throwing out products for the sake of charging subscriptions or fees if it doesn’t make sense”.
The next few weeks and months will be a central test for Smith’s new regime, as she aims to take more new products to market.
One of these will include working capital solutions for small businesses and sole traders, Starling confirmed, which will see it open a new stream to monetise everyday admin processes.
Students accounts are also in the pipeline for next week, in a move that will make Starling the first neobank to offer such a service.
A ‘game-changing’ use of capital
For the long-term, at Smith’s disposal is the £12.7bn in deposits that Starling recorded at the end of 2025.
The bank has a loan-to-deposit ratio of 41.2 per cent, meaning around £7.5bn sits ready to be deployed for lending activities.
Starling has also been a beneficiary of the Bank of England raising the threshold for MREL regulation, which forces banks to hoard extra capital based on the amount of assets they hold.
The bank’s capital surplus exceeded £525m as of May 2026, which Smith says leaves all the options on the table.
“We have the ability that many other firms don’t have because we have so much excess capital… it gives us optionality,” she says.
The top brass at the group have made no secret of their acquisitive appetite and as Smith mulls over her three-year plan she’s remaining open to all things from “small and complementary” to something “absolutely game-changing for Starling”.
As for what a “game-changer” could entail, she describes something “sizable enough that it makes a significant impact” – an impact that could perhaps turn the tide on conversation around the group.