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Questions Over Whether UK’s Starling Bank Will Hit SMB Loan Target

London’s digital bank startup Starling Bank has loaned just 1 percent of the amount it has pledged to give to small and medium-sized businesses (SMB) over the next five years, BM Magazine reported on Monday (Dec. 9).

Founded in 2014 by former Allied Irish Banks COO Anne Boden, Starling Bank committed to execute almost £1 billion ($1.3 billion USD) in loans. The guarantee was a provision of winning funding from the Royal Bank of Scotland’s (RBS) £775 million fund, which RBS was required to set aside as “punishment” for its 2008 £46 billion state bailoutStarling Bank has lent only £782,000 to SMBs since winning the RBS money in February, causing some to cast doubt over the bank’s ability to meet its agreement within five years.

But Starling Bank’s Head of Corporate Affairs Alexandra Frean told PYMNTS.com in an email that the company is on track to meet its Year 1 and Year 2 lending target.

Regarding its loan target, Starling Bank said last month that “startups, by their nature, often have a limited capacity to service and provide security for debt, and, to date, this has curbed Starling’s ability to lend,” according to BM Magazine. 

Boden owns 24 percent of Starling Bank, along with current and former employees. The challenger bank offers digital, branchless banking via an app, and features savings and money management tools. With deposits totaling over £1 billion, up from £600 million in August, Starling Bank’s account average is £11,330. 

Starling Bank also announced on Monday that it has added Sparqa Legal to its business marketplace, its first legal services partner, Crowdfund Insider reported. The partnership is intended to bring affordable legal services to the marketplace’s 88,000 small business customers.

“At Sparqa Legal, we passionately believe that, armed with the right tools and resources, smart business managers can produce many of the simple legal documents they require. They can also find out about their rights, obligations and the best course to take,” said Andrew Thornton, CEO of Sparqa Legal and barrister at Erskine Chambers

 Sparqa Legal can help businesses create contracts, policies and documents that are necessary to launch and run a company.

“No matter your industry, when you start a business or become self-employed, there are all sorts of complicated terms and conditions to get your head around. … That’s where Sparqa Legal comes in,” Starling Bank said in a blog post

Starling Bank announced in September that it was launching a web portal, and would introduce new loan offerings from third-party providers.

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New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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