By Oliver Smith on Monday 20 December 2021
Starling-as-a-service is used by everyone from Raisin DS to Standard Chartered. Now Starling’s chief banking officer wants to take it international.
“We're our own live use case.”
That’s Helen Bierton’s simple explanation of why someone would choose Starling’s banking-as-a-service (known affectionately internally as Starling-as-a-service) offering the plethora of alternatives out there.
Starling’s chief banking officer is keenly aware of the competition, but believes the challenger bank’s technological performance speaks for itself.
“We're using this day in and day out via our own regulatory licence, and you can see how strong that technology is from the experience of our customers, our ongoing availability and reliability,” she tells AltFi.
Banking-as-a-service (BaaS) is hardly a new endeavour for Starling, Raisin DS became its first commercial client all the way back in 2018, and the bank even won a UK government contract to provide payment services for the Department for Work and Pensions.
As Anne Boden told AltFi at the time, in order to justify the expense and regulatory burden of having a banking licence, “you have to do a lot of banking”.
But as the turn of the decade approached, Starling’s focus shifted towards business banking. This decision was handsomely rewarded with a £100m grant from the Banking Competition Remedies fund and was exceptionally well-timed with the subsequent Covid-19 pandemic super-charging the bank’s business lending.
Now, Boden’s gaze is returning to BaaS, outlining in her CEO letter this Summer that the bank will “ramp up” the offering.
Today the fruits of that decision are already becoming evident.
Indeed this November, Standard Chartered announced Shoal, a new ‘flanker’ brand launching in 2022 for consumers to invest in green and sustainable projects, and with accounts powered by Starling Bank.
Standard Chartered’s use case does raise a potential conflict of interest with Starling’s BaaS offering, namely that Starling’s clients may ultimately compete with the bank’s core business.
Bierton says, “it’s hard to imagine” why somebody would choose Starling if they were building, say, a rival SME banking service.
But the executive doesn’t dismiss the possibility, and Starling’s own BaaS product page boldly proclaims that it exists “where collaboration coexists with competition”.
However, there are clearly some limits to the bank’s flexibility. The gambling, adult entertainment and cryptocurrency sectors are explicitly excluded by its eligibility criteria.
Starling’s next push is to expand BaaS into Europe, with a team based out of Ireland and led by country manager Elaine Deehan.
In September, Starling confirmed that France, Germany, The Netherlands and Spain are top of its list of European markets to start offering banking services in.
“The regulations are a little bit different, the markets are a bit different, but we've got experience, we've got an amazing technology platform, and we're already offering customers Euro accounts,” says Bierton.
“We've got the ability to take the currency side of it and move quickly into those markets.”
The only challenge is that Starling doesn’t yet have a regulatory route to launch its services into Europe, given its Irish banking licence application has been dragging on for nearly four years now (by AltFi’s count).
Still, that’s not holding back Bierton’s ambition. Towards the end of our conversation, the executive reveals that Starling is committed to launching BaaS internationally, even if that means looking beyond Europe.
“We feel that this is a service that we could offer completely internationally,” she says.
“I think we may go global with this at some point.”
Bierton wouldn’t be drawn on which markets or on what timelines but says Starling will have many more BaaS announcements to come in the new year.
“I'm anticipating being able to talk to you about offering more of our services in more geographies and to more businesses.”