Trying not to get too ‘fanboy’ with Starling, ‘no interest on current account’ isn’t strictly (at least for the next 14 days) true. Until next month their current account does have 3.25% interest on it and it’s had that for over a year or so. Next month (14th) they’re removing it because they’ve ‘launched’ (in a completely broken way) their own instant access savings account.
Based on what Monzo have down with their packaged accounts, I hope Starling never launch them personally.
The one feature that’s kept me with Starling (other than the simplicity of the app - for better than the cluttered Monzo) are the free virtual cards that can then be linked to individual savings spaces. That helps me with budgeting - I’ve got 2 spaces and virtual cards setup, one for ‘bills’ and one for Amazon. The ‘Bills’ one then has all the Direct Debits and also that card is what I use for any subscriptions (Netflix, Disney+ etc.) so I know exactly how much I need to keep back to pay for all that. The ‘Amazon’ pot is to add a bit of friction to impluse buying - the pot is kept empty, if I see something I want to buy online (not just Amazon, but it was a handy name) then I need to first go into Starling and manually transfer over into the pot the amount I need to pay for it. That’ll give me 5 seconds to reconsider if I really need it or not.
I don’t know any other bank at the moment that offers free virtual multiple cards and multiple pots/spaces like that. Monzo has it behind a paywall and Chase has it’s weird ‘only one card but you can manually attach it to different accounts’ which’ll be ok for the ‘Amazon’ idea, but no good for paying for subscriptions regularly.
You can pay direct debits from them, and once the recurring card payments have been taken once, they can then be moved to a pocket.
There is option to assign a card to a pocket out there, I don’t have that option on iOS, but I’m sure some Android folk had it. This was ages ago, so you spend directly from pocket which would be great.
I also didn’t mention that I’ve also still got the ‘Connected Card’ that they launched during Covid but I think they’ve now stopped offering, but still works. So, that’s my ‘petrol money’ card for the month.
So, vaguely talking about ‘overlooked innovation’ with Starling, does anyone have any specific services linked through the Marketplace with Starling?
Things like PensionBee, Wealthify, Habito?
When it launched, it sounded like an interesting/good idea - but I think even Starling are a bit embarrassed about it and have hidden it away now. It’s main use now is looking at what you’ve connected via open banking so you can check and disable it if you want.
Starling should update their merchant data (logos and business names) -also add number of total transactions for merchants/ categories (past a years worth)
Checked last week out of curiosity to see what shows for me (closed my account over a year ago now), and I got the business account options on the “open a new account” page. Now though, I’m getting the same as you. Not sure what triggered that to happen.
It’s good that some providers are holding back on the reductions. A drop in base rate doesn’t always mean the bank is going to experience a sudden drop themselves.
I’m sure Starling, Monzo and others are investing customer funds in supranational bonds and other securities to offset sudden base rate drops.
The main reason these base rate reductions are passed on immediately by most banks is simply because there is consumer tolerance for it. It’s expected by most people, so why not.
Does Monzo say exactly what they do with customer funds held in current and savings accounts? This would be quite interesting to know. Obviously they lend, but that’s subject to limits.
I’m sure it will be somewhere on the Monzo site. Sadly, I’m not interested enough in this topic to go and look for it.
Smaller banks are actually allowed to do quite a lot with your money. I believe the rules only become super strict once you reach £25bn in deposits. This is why the likes of Marcus kept suspending deposits in the UK, to stop themselves being subject to the stricter rules.
Starling are transparent about this on their site:
“We invest your money on supranational bonds and securities backed by UK residential mortgages. These investments are to support the Bank’s liquidity. We carefully consider who we invest in, taking into account a number of factors. We do not invest directly in fossil fuels.”
We’ve had this discussion before I think in another thread. You are correct, but reaching that threshold also limits what the retail operation can do with funds held, I’m sure.
Retail operations can and do invest, usually low-risk, easily convertible investments. You don’t need a separate investment bank to carry out these activities.
You are correct though, in terms of ring-fencing and separation of retail and investment banks.
I don’t know that they can invest as such, more put it in various cash related investments.
The ring fencing is to stop an investment arm of a bank pulling down the retail arm if things go badly wrong with the investment side. Think Lehman’s, which had at one point me as one of their retail clients.
