Are digital banks redefining the future of banking?

Ravi Kittane speaks to Nick Drewett, Chief Commercial Officer of Engine by Starling, on why trust, service and innovation matter more than technology in modern banking.

Ravi Kittane speaks to Nick Drewett, Chief Commercial Officer of Engine by Starling, on what it takes to build and scale a modern digital bank, focusing on how cloud native platforms are enabling faster innovation while reinforcing the importance of maintaining a human touch.

Key takeaways:

Digital banking success depends less on technology alone and more on building trust through consistent, customer-centric experience.
Focusing on underserved segments, such as small and medium enterprises (SMEs), can unlock growth by addressing real, everyday customer needs.
Cloud native platforms allow faster innovation, lower costs and greater operational resilience.
AI presents new opportunities, but trust and human support remain critical in the banking environment.
Modernization is as much about transforming culture, ways of working and decision-making as it is about acquiring new technology.

Presenters

Ravi Kittane

Partner, Ernst & Young Consulting Sdn Bhd

Nick Drewett

So it’s about much more than the technology. Trust is incredibly important to us and it’s sort of in our DNA. And, you know, we have to earn the trust.

Ravi Kittane

Hi, everyone and welcome to the EY Executive Exchange. Today we are exploring digital banks again. We’ll be covering the Starling success story, the Engine success story, as well as lessons learnt across markets and what it actually takes for banks to win here in Malaysia, as well as in Southeast Asia.

Ravi

And joining me today is Nick Drewett, the Chief Commercial Officer of Engine by Starling, the platform powering a new wave of digital banks worldwide and a close partner that we work with.
Let’s start with Starling. What does the Starling Bank story look like for people who are not familiar with Starling?

Nick

So Starling was founded by a lady called Anne Boden, launched in the beginning of 2017 and has grown steadily. So 10 years on, Starling Bank now has 4.5 million customers. That’s about four million retail customers and half a million small business customers and it’s profitable, as you say.
I think there was always a purpose to Starling Bank. Anne set out to make banking better for people and take advantage of new technology to enable a better bank experience, help people look after their money and their financial wellness better.

Ravi

Amazing.
And we also noticed that your focus is on SMEs. So what does that take? 9% market share in a very competitive market like the UK, I think it’s quite interesting.
So, what made you kind of go into the SME market and be so successful at that?

Nick

The business customers that really value Starling, they tend to be small businesses, one to 20 employees, often a sole proprietor who is very comfortable doing their personal banking and their business banking on their on their mobile phone in the evening.
So and that that segment traditionally has been quite underserved. It doesn’t have the scale to be exciting for the corporate banking side. And it’s outside the remit for retail banking. So we saw an opportunity there.
We were fortunate enough to receive the benefit of a £100 million grant, essentially to foster competition for small businesses in the UK, which helped tremendously. And that was invested in the platform.
And we built features that make banking better for small business owners with really good customer service, convenience, accounting, integrations.
Essentially, small business owners are busy people and having a banking experience that is just, that just works, self-service and provides that convenience, has been very, very powerful.

Ravi

Something that you guys did quite early on is, you know, embedding some really useful tools, which are non-banking tools, whether it is the tax toolkit or some of these embedded features that went into your SME app. How has that actually helped?

Nick

Well, I think it’s all sort of furthers the cause.
So Starling as an organization is very, very genuinely customer centric. So not everything has to have a business case or a financial benefit to Starling. As long as it’s making banking better for people, whether it’s on the personal side or the business side.
So recently there’s new legislation in the UK about making tax digital, digital submissions of your tax returns. So we’ve invested in the capability and integrated into the banking app to make that a seamless experience and a service for small business owners and take a potential headache away from them.

Ravi

I think that’s so relevant again to our market here. We have just launched e-Invoice a few years ago here. And you know, that ability to make life easier I think is really valuable.
So just another promise that you know Anne Boden started with is that 24/7 human support.

Nick

Yes.

Ravi

I think having spent some time at Starling, you know, both in London and Cardiff, you know, seen how that 24/7 support enabled by technology can be powerful.
But we also noticed recently that you have made your strides into AI, one of the first banks in the main banks in the UK which has done it.
So how do you then kind of, you know, juxtapose that 24/7 human touch promise with the AI features that you’re bringing in?

Nick

Probably best to start with explaining why we wanted and offered a 24/7 human-centric customer service experience.
That was because when we launched, we didn’t have branches and Starling, the target demographic, it wasn’t necessarily young, digitally native people. It was normal people in the UK. So we felt that it was very important to build trust.
That was point one.
Point two, when you moved to digital self-service and can run a bank on a single cloud native platform such as Engine, the cost of running the bank is very, very low.
So we can afford and we choose to spend a good portion of those savings on an absolutely outstanding customer service experience. And that has helped Starling’s growth tremendously.
One of the greatest things about Starling is the customer service rankings. There are all sorts of different league tables, but Starling’s always around the top across sector.
You know, there’s one survey that as it says, “number two brand in the UK for customer service,” just below the shoe repair company called Timpson, who are outstanding.
So now that customer service, when people call into Starling is generally because they have a problem that they need help with.
And that’s why having a human person, an agent who not only can help them and is told to spend as long as necessary sorting the customer’s problem out, that really drives loyalty and recommendations.
So in turn, our customer acquisition cost is very, very low because it’s spread by word of mouth and personal recommendation.
So that formula has worked very well for Starling. It’s consistent with our purpose as an organization and the target demographic.
Then turning to AI, our view.
Because we have a huge advantage, huge natural advantage because the bank is running on Engine. So we have all real-time APIs, the real-time data of the bank, a consistent data schema across the whole bank.
So we’ve solved the technology problem of banking. So now and that explains why Starling is at the forefront of innovation in AI.
And because it’s quite easy for us to build agents and embed them either into the customer app or the employee workflow.
For us, it’s a kind of, this isn’t about cost saving. It’s consistent with our philosophy of, well, let’s put things in the hands of customers and see if it helps make their life easier or better by whether they use or how they use it or not.
So we’re learning, we’re putting things out there and we’re seeing what works, what people value. And if they like it, it will stick.
We’re not taking away the human option at all. We’re just introducing a new capability to see if it’s value.

Ravi

So tell us a little bit about, you know, Engine. What was the kind of origins of it? I know you were one of the first employees there. So what is the origin of Engine and how has that story been so far?

Nick

So it came about for a few reasons.
One of the principal ones was because we were quite a well-known case study in digital banking. Banks from around the world would come to meet with Starling Bank and understand the secrets of Starling’s success.
And when they saw what it looks like to run a whole bank on a single cloud native platform where all employees use the same interface, they have role role-based access. There’s a single view of everything.
The bank puts as much effort into the employee journeys, creating intuitive and delightful employee journeys as the customer experience.
When banking executives saw that and what it looked like for people to work in a bank like that, they were blown away because as anyone that’s worked in a bank knows, with the proliferation of systems it’s very hard to create an outstanding customer service when employees are tabbing between screens and data is not joined up and you have to raise tickets. Customers experience that, they can feel the joints in an organization.
So as a result, increasingly banks would say to us, that’s fantastic. How can we get hold of that?
And that sort of gave rise to the idea of the strategy for Starling, for international expansion, became to partner with banks around the world, where we provide the platform as a managed service, and it becomes very much a long-term partnership.

Ravi

So that’s quite different from the Revoluts of the world, which is essentially going around the world, you know, building bank franchises in different parts of the world.
So how do you kind of compare what a Revolut or a Monzo or even, you know, Grab in our region is doing to what Starling and Engine are kind of doing together.

Nick

Well, as you say, it’s quite different. Both Starling Bank’s purpose and mission is very different to Revolut’s purpose and mission.
Both organizations have to be admired. Revolut had a very clear purpose and they’ve set about it, and they’re delivering very spectacularly and are now very profitable.
I think digital banks generally are still scratching the surface of transforming banking. So there’s plenty of room for different business models and different focuses and purposes in the sector.

Ravi

And it’s fascinating, right? Like, you know, again, something that started off as a very pointed offering, whether it’s from Revolut or Wise or yourselves, has now gone into multiple business models.
So maybe talk a little bit about Engine and something that you said actually piqued my interest on the data model and how that cloud native single data model platform can not only enable banks achieve all the digital success, but also be that foundation for AI.
So maybe you can, if you can just give our listeners a good view of that, that’ll be awesome.

Nick

The data architecture of Engine was one of the primary reasons why Starling in the early days felt the need to build their own banking platform because in order to make banking better for people buying something, a package that was commercially available wouldn’t have achieved that.
And one of the reasons they weren’t able to support our strategy was the data architecture.
So for example, Engine has a much more granular data architecture. Money isn’t just held in an account. And accounts don’t just have owners.
People can have all sorts of different relationships with sub-accounts essentially, that aggregate up to accounts.
And that enables a better banking experience. For Starling Bank, given our target demographic of middle-aged, middle-income people, they tend to use that capability for a child account for pocket money or for a bills manager where you can put all of your monthly bills in a space.
I use Starling, I have a school fees account, and I can put a monthly amount in and three times a year a very painful direct debit goes out, but I can not worry about it. And that’s really useful. So that data architecture enables better banking propositions.
One of our Engine clients, Salt Bank for example, they’re doing a fabulous job in Romania. They’ve grown very rapidly.
And they have their own engineering team that are innovating using our APIs and data architecture.
One of the things that they launched not long ago was, they call Help Mama, which is where if a Salt Bank customer has elderly parents, if the elderly parent has a Salt account, they can configure their accounts so any payment over a certain threshold has to go to the adult child for review.
So they retain financial independence. They don’t have to go the full power of attorney route to keeping them safe, but they have a trusted family member sitting on their shoulder just keeping an eye on things, which I think is a fantastic innovation.
And again, no real business case, but it’s just making banking better for people, enabled by modern technology.
Then along comes AI, which and as I said, it’s fast moving.
And one of the difficult challenges with AI in banking is AI tends to be quite fuzzy and prone to hallucinations.
In banking, you need precision. You can’t be approximately right when you make a payment or transfer money between accounts. It has to be precise. It has to be compliant, appropriate and safe.
So one of the things that helps us tremendously is we’ve got a consistent data schema across the whole bank.
The agentic solutions that we’re building can have much greater fidelity in understanding the customer’s intent, and can act on the intents, because the whole bank is run on real-time APIs.
So you can instruct the agent, you can have a conversation with the agent about, I want to save some money for my grandchildren, and it will then go and set up the savings account and the monthly payment into it.
So yes and having that data architecture is a key enabler.
I can’t imagine how difficult it would be with legacy systems that are difficult to integrate with and with inconsistent data.

Ravi

Engine has been in business for a few years now, and we know that you have some successes in Romania, in Australia, recently in New Zealand and Canada. Talk to us a little bit about the success and specifically your client successes.

Nick

I suppose one thing to sort of set the scene is being part of a banking organization. The word trust is incredibly important to us and it’s sort of in our DNA. We sort of as an organization, understand what it takes to run a regulated business.
And the Engine proposition is it’s a managed service. So essentially an outsource of the entire underpinnings of a bank. It’s a massive decision for a bank it's a very, very high trust decision and not one to be taken lightly. And, you know, we have to earn the trust.
This isn’t a sort of simple software sale by any stretch and we don’t view it that way. We view these relationships as long-term trust-based relationships.
And the clients that we’ve been lucky enough to bring on board in our early years, they’ve all been quite different and in a way representative of different sectors. And they’ve all seen different things and value different things and Engine.
Our first client for example, Salt Bank. So that was a greenfield digital bank. For them, their mission was to build something in Romania that could give customers something that would rival and potentially would rival Revolut but be more of a bank and a Romanian bank.
And for them they wanted to get to market fast with a very complete digital banking offering. And so Engine for them, because it’s a complete platform, enabled them to get to market in 12 months and hit the ground running. They were onboarding 15,000 people a day, week one. So, which is quite remarkable. And they’ve grown fabulously since.
AMP Bank in Australia, they were our second client. So that’s a small business bank, a digital small business bank as a sidecar to an existing financial service institution. And so that’s wonderful to have a case study, a successful case study. They also went live in 12 months in the small business space.
Tangerine in Canada. That’s a significant undertaking. It’ll be a migration of two million customers.
And then our final, not final, most recent client is a mutual in New Zealand. So very different. 90,000 members, savings and mortgages. But equally important to us because there are a lot of small banks, mutuals who need a modern platform.
Each of them represents a different sector.

Ravi

So if you take a step back, you know, multiple organizations that you know, you work with, like, what have they really tried to solve for you, talked a little bit about trusting you to do that. Like are they trying to solve their legacy systems? They’re looking at their ways of working? Like what is it that they’re trying to solve? And how do you go about doing it? Like what are the mechanics of it?

Nick

They all have different problem statements to start with. But I suppose the common characteristics are, these are organizations that want to modernize and they’re bold. They’re led by visionary chief executives who can see the potential and see a migration to Engine as being a vehicle for modernizing the bank in its entirety. Culture, ways of working, growth.
So it’s about much more than the technology. It’s very much an exchange of ideas and thinking and experience. We spend a lot of time with our clients. Immersing them in how a digital bank runs and how different it is.
You’ve come to our call center in Cardiff that opens people’s eyes to see how different it is and what the experience of the frontliners in a digital bank.
The whole change cycle and innovation approach changes dramatically when you can get ideas and new features into production in a week. That dramatically changes the way a bank manages the whole topic of change.
So yes, it’s a much broader collaboration than just implementing new technology. Essentially, you’re solving a business problem.

Ravi

And you know, earlier in the day when we were having lunch we were talking about the fact that the idea that technology becomes relatively easier to modernize. In the case of Engine, it actually allows the banks to think about things that really matter to them their customers, their growth strategy.
So maybe talk a little bit about that because I think that’s a fascinating piece. I thought, you know, in our lunch session today.

Nick

So I think I observed this first with the Salt Bank implementation. There, they went live. They had a go-live date of April 24. And that summer there were ill-fated general elections in Romania. So the political parties had booked all the media slots from May onwards.
So they faced a very difficult decision in sort of January time, which was do we stick with our scheduled go-live date knowing that there’s a very narrow window of opportunity and they needed to book the media slots in January or do this, do the low-risk thing and do a sort of soft friends and family launch in April, wait for the dust to settle on the elections and then do a full marketing launch later in the year.
They decided in January, “No, we’re sticking with the April launch date,” which was a real mark of confidence that the go-live would happen as planned.
And not only that, they then had to put a lot of effort into thinking, into that marketing launch into the brand and they did a fabulous job. Hence onboarding 15,000 people a day, week one. They had TV campaigns. They have this wonderful brand involving a sloth.
It was interesting that they were able to apply that management bandwidth to the problem of growth instead of I think many additional bank builds are becoming quite, well, you probably experienced this, they’ve become difficult technical implementation projects.
And I think we’re now seeing it with the two clients that are working with who will be doing migrations.
If you look back, so core banking replacement is a topic that fills most chief executives with dread. These are things that are best avoided.
But if you look back at the failed projects it tends not to be the migration itself that’s the problem. It’s eminently doable. It’s the time it takes to get to a working target solution that tends to be the problem.
And there have been some famous examples in the UK where, you know, there were government inquiries and reports written on the topic of when it takes five years to get to the target solution, 15,000 change requests, changes of leadership, changes of direction. The project is doomed before you get to the point of migration.
So you can see how and we’re seeing it already, the implementation, getting-to-the-target solution is much more straightforward when you start with a working bank and you’re connecting it to domestic payments and data sources and building an app than it is with traditional core banking replacement projects.

Ravi

It’s great to hear about Engine and your success as well as Starling. What can we learn from all these implementations?
Because we have got five digital banks here. We’ve got our incumbent banks who are also into the digitalization journey. Some thinking about core transformation. So these are all very topical subjects around here. So maybe there’s something that we can learn.

Nick

I suppose there are observations and sort of general trends around the world that will apply equally here. They’re all the same.
Banking is very similar in most markets and most banks around the world are facing the same sort of challenges. The challenge of dealing with legacy systems, having kicked that can down the road for many years.
We’re reaching the point where that’s just not viable anymore. You know, the competition from digital banks is becoming increasingly real, as some of these organizations become more successful.
And so the challenge, the modernization challenge in the case for it, will only increase.
So I guess for banks who are contemplating that, I think I would say the technology has evolved to the point where there are some options that can dramatically reduce the risk.
It’s interesting what’s happening with AI and a lot of the received wisdom from the past may not apply going forward. As we learn how to really take advantage and exploit that technology and design ways of interacting with customers and getting work done.
Which arguably increases the impetus for getting those foundations onto a modern footing even more so.
So I think these are, these are common issues and trends around the world. Increasing competition, increasing frailty of the existing systems and just the need to get to a place where you can start innovating and learning and using new technologies to help people.

Ravi

It’s fascinating, right?
You know, we have seen the kind of, you know, the expansion and shrinking of the universal bank. You know, think of large banks like a Citibank or HSBC, which went across the world and they seem to be in a more or kind of get-back-to-home territory.
Whereas if you think about a digital experience, there seems to be more things common across the world than that. So it’s quite fascinating.
And, you know, when you see a Revolut or a Wise or yourselves kind of do that expansion. So to me, you know, it’s kind of an interesting cycle that we are in.
And you know, you talked a little bit about the frailty and the need for operational resilience and the need for running a 24/7 system.
So maybe talk a little bit about that, which I think it’s becoming very topical here in Malaysia and the region. Our central bank is also looking at new regulation around operational resilience, that’s coming in. UK has had this for a few years now. So maybe a little bit of context around that will be helpful for listeners.

Nick

Anyone who still believes that running a bank on a cloud native architecture, that cloud is just another form of infrastructure, is really missing a trick here.
Cloud native architectures enable resilience.
The famous example is when Netflix moved to the cloud and rebuilt the systems. The edict that was given was Netflix must never ever go down. It must be always on. No maintenance windows. It’s just got to be continuous. Certainly no patch. But it must never ever go down.
And as you know that’s where the whole principle of chaos engineering came about.
The architectural principles that make sure that a service never ever goes down of eventual data consistency, managing the blast radius of any problem of idempotent processes. All this thinking is predicated on cloud native architectures.
So what’s been fascinating for me is observing how the regulator’s attitudes have changed and how Starling Bank runs very differently.
When you’re putting 30 to 40 changes a day into the live production environment of the bank as Starling does and the change window is very strictly observed, which is between 9:00 a.m. and 5:00 p.m. weekdays only.
So no change allowed out of hours, which is the complete inverse of most banks who bundle change up and have a big change done in a weekend event, probably at around midnight. That’s because they’re dealing with very, very fragile systems.
So the regulators in the UK took a while to get their heads around this new way of working because they saw how Starling was doing change and couldn’t understand where’s all the paperwork, where’s the control and the committees and the governance.
Now, they have got their heads around it and they now understand very quickly that this is exactly the way to improve operational resilience.
Lots and lots of very small changes that keep the platform current and performant and evolving is exactly how you achieve operational resilience.
So they now view the way Starling does change as best practice.

Ravi

We’re also writing an article together on unlocking profitability through transaction-led digital banking. So hopefully you all can catch it.
I think this is something that we can all learn from.
I think the window of opportunity is there. I think, you know, as we move towards this world where customer expectation continues to converge, you know, from across the world and as well as, you know, the regulatory piece that you talked about in terms of you know, operational resilience happens I think it’s something that’s fascinating.
So we covered all of that in our article.
Nick, final thoughts?
And you know, where should people look up, you know, if they want to know more about Starling and Engine.

Nick

Well, they can always speak to you and myself and we have our websites and we have LinkedIn. We have all sorts of, we try and put content out regularly, but yes by all means get in touch.
And final thoughts, yeah, I think these are very exciting times and very interesting times.
But I think the opportunity to make banking better for people using modern technology is one, that is a cause, that’s very worthy and worthwhile.

Ravi

Awesome.
This is EY Executive Exchange. Share this episode and follow us on LinkedIn for more conversations that shape the future of our business.
Thank you so much.

Podcast

Insights Malaysia, Episode 4

Duration

32m 46s

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