Last week, Starling Bank was fined £29mn by the Financial Conduct Authority (FCA) for what the regulator described as “shockingly lax” financial crime controls. Many IC readers' first reaction would be to view this as another blow to the reputation of one high-profile Starling investor, the Chrysalis investment trust – up 70 per cent since its lows last October, but still two-thirds below its peak pandemic-era valuation. There are also wider points to be made about fintech and financial services in general.
It's not just criminal controls that can be lacking at neobanks. This time last year, I opened a savings account at another newish bank as a place to park some short-term cash. As such things go, it looked reputable. Yet once the account was open, the dashboard showed details of fixed-rate savings held by an entirely different person.
That stemmed, presumably, from having a common first name and surname. Still, it’s clearly something that should never happen at any business, let alone a financial services firm, and prompted a rethink of the wisdom of using a neobank.