CEU Electronic Theses and Dissertations, 2021
| Author | Onashabay, Nurzhan |
|---|---|
| Title | Effects of Covid-19 Pandemic on the Key Profitability Factors of Digital Challenger Banks. Starling Bank Case Study |
| Summary | The fintech sector is one of the most promising sectors in the financial services industry. Within the fintech sector, one of the most popular sub-categories is digital banking. This sector has experienced an unusual shock from the Covid-19 pandemic and its impacts have been unevenly distributed within the industry. This paper aims to examine the impacts of the pandemic on digital banking profitability. The core case covered in the paper is the example of Starling Bank, which became profitable in October 2020 amid the pandemic, thus making it an important case study to understand the impacts of the pandemic on the digital banking industry. Besides Starling, the paper will benchmark and compare Starling to its key peers and competitors to identify what allowed Starling to break even while other players have been affected negatively. Key profitability factors considered in the paper are the number of customers, customer behavior, product offering, and monetization models, as well as a fundraising activity. The number of customers switching to digital banking channels has significantly increased because of the pandemic thus accelerating customer base growth of the digital challenger banks. Combined with a growing number of customers using digital banks as their primary account, this strengthened the financial performance of many digital banks, including Starling Bank, which were better positioned to serve customers remotely during the pandemic. An important factor that distinguished Starling from peer banks was their ability to distribute government-backed loans in the UK which allowed them to significantly increase revenue with limited costs. Finally, Starling Bank was also well-positioned financially having secured a fundraising round right before the pandemic, which allowed them to have a cash cushion against possible negative effects of the pandemic. |
| Supervisor | Lee, Tomy |
| Department | Economics MA |
| Full text | https://www.etd.ceu.edu/2021/onashabay_nurzhan.pdf |
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