Starling Bank Cuts 130 Jobs as AI Adoption Drives Restructuring

Starling Bank is cutting 130 jobs as it makes changes to its structure and expands the use of AI in its business. The job cuts are part of a move by the challenger bank to simplify its organisation and cut operating costs by increasingly automating internal functions using AI. It stated that it would not be reducing investment in its key strategic areas.

The decision comes as the use of AI is revolutionising banks' approach to both internal operations and customer services.

Banks and lenders are using AI across the globe to improve fraud detection and ensure better customer service and efficiency. A shift is under way as banks increase reliance on tech and cut costs to prepare for the next wave of growth, at a time when AI has become increasingly a feature in every aspect of banking operations and is proving invaluable. As well as helping staff, such AI capabilities would ensure that banks reduce risk, speed up transactions and make more-accurate lending decisions. The restructuring comes amid the rapid advancement of AI technologies and the increase in automation which banks will have to tackle over coming years as they find new technologies replacing roles that already existing now but not for the near future.

It said that the restructure was the outcome of its “long-term strategic review of our organisation” rather than as a result of financial pressure, and it plans to invest in new technology and enhance new products while growing its customer base.

The bank is focused on becoming a ‘leader’ and plans to continue investing in “key areas” to deliver on its long-term goals. Starling plans to use tech and a focus on automation and data to achieve “greater productivity and further enhancement of the customer experience.” Other high street banks including Santander and HSBC have also implemented job cuts this year with the move away from branches as a key driver.

Santander said it will be cutting about 1,000 staff from its UK division. “We are investing heavily in technology and AI,” Starling boss Anne Boden said at a tech conference in March this year. The digital bank added that it has “more 2,500 staff worldwide and will continue to hire in many areas of the bank.”

The challenger has more than three million customers and generated revenue of £567.8m in the six months to the end of September, up 54 per cent year-on-year.

“We’re not making changes because of any current challenges,” Mr Budgen stated to staff on Friday. He told staff that this will be achieved through greater use of AI “across various functions, to automate existing processes, and further enhance customer experience.” The cuts at the digital-only lender reflect a wider trend in the financial sector where automation and tech are becoming essential to remain competitive and deliver services. While some jobs may be reduced through this drive, Starling said new roles will be created in technology, and AI in particular.

In the last six months the bank announced a profit after tax of £72.6 million.

The challenger bank grew customer numbers by a further 685,000 over the period and processed 517 million transactions - 16% more than the previous half. Its revenue of £567.8 million for the period rose by 54 per cent. In the first half of this year alone Starling processed one billion transactions – 56 per cent more than the first half of 2022.

Its total revenue jumped 67 per cent year on year to £306 million.