Starling New Banking Boss Bernadette Smith Aims to Boost Profits and Fee Income

In June 2026, digital bank Starling appointed Bernadette Smith to lead its central banking operations, tasking the new executive with reversing a three per cent drop in pre-tax profit to £217m and accelerating a stalled diversification drive into fee-based income across the United Kingdom.

The challenge facing Starling’s leadership centers on falling interest revenue as the Bank of England reduces base rates. According to financial disclosures, Starling’s revenue slipped 5.6 per cent over the last reporting year. While rival challenger institutions expanded their non-interest revenue streams aggressively, Starling’s fee income remained flat at £128.2m, accounting for just over 14 per cent of total group revenue.

“I don’t want a dip in profit, I want a healthy improvement in profit,” Smith told City AM after entering her sixth week in the role. “If I could write the headline for Starling next year… it is we’ve made some changes, we’ve come out swinging with energy, and this is a consequence of that.”

Challenger Bank Strategies and the Fee Income Race

Across the British fintech sector, firms are racing to offset narrowing net interest margins by cultivating robust subscription and service fee models. Competitor metrics highlight the widening gap in non-interest streams. Monzo posted a 39 per cent jump in fee income to £459m in the last year, anchored by subscription bundles featuring consumer perks. Revolut recorded a 67 per cent growth in its subscription service revenue through packages like its ‘Metal’ tier.

By contrast, Starling’s growth in that specific vector stalled. Smith rejects the notion that the bank possesses a structural diversification problem, though she acknowledges the metric requires immediate correction. “I would definitely want to see fee income go higher than 15 per cent… I know it’s incredibly important to us that we increase that… it’s going to be a key priority for me,” she stated. However, she emphasized that any new fee-based additions must deliver genuine utility rather than arbitrary charges.

Navigating the complex regulatory requirements and financial compliance standards associated with rapid product diversification often requires specialized oversight.

Product Velocity and Capital Deployment Under the New Regime

To jumpstart momentum, Starling launched at least one product or feature per week during Smith’s first month, ranging from travel e-sims to business expense cards. Upcoming rollouts include dedicated student accounts—positioning Starling as the first neobank to enter that specific segment—alongside working capital solutions tailored for small businesses and sole traders.

Underpinning these commercial maneuvers is a formidable balance sheet. Starling recorded £12.7bn in deposits at the end of 2025. With a loan-to-deposit ratio of 41.2 per cent, approximately £7.5bn remains available for lending deployment. Furthermore, adjustments to the Bank of England’s MREL regulations—which govern the capital buffers banks must hold against assets—have left Starling with a capital surplus exceeding £525m as of May 2026.

“We have the ability that many other firms don’t have because we have so much excess capital… it gives us optionality,” Smith noted regarding the bank’s strategic latitude.

Evaluating M&A Potential and Future Growth

That capital surplus leaves all strategic options open as executive leadership formulates a three-year growth plan. Smith confirmed that management remains open to corporate acquisitions ranging from small, complementary asset purchases to sizable transactions capable of altering market perception.

Executing large-scale corporate transactions or integrating external portfolios requires rigorous financial planning and auditing expertise.