Starling Bank ditches European license plan

By Daniel Lanyon on Tuesday 19 July 2022

Alternative LendingDigital Banking

"Sometimes changing course is the right option," said Anne Boden, founder and CEO of Starling Bank.

Starling Bank ditches European license plan
Image source: Starling Bank/Anne Boden

International expansion has been on the cards for Starling Bank, one of the UK’s most valuable fintech companies, for almost as long as the bank has been operational. In a major shift in its strategy, however, it has withdrawn its application for an EU license. 

Starling, founded by former AIB banker Anne Boden, applied for an Irish banking license back in 2019. Ireland was set to be its first foray into international expansion, itself part of wider plans to create a pan-European. However, the lender will instead refocus its efforts in the supply of banking technology to grow its presence internationally.

The major development, first reported by Sky News, comes from a memo Boden sent to Starling’s c.2000 staff members yesterday. 

In the memo, she says that focusing on a different strategy would deliver a better return. 

"Sometimes changing course is the right option," she wrote in the memo.

"My job as CEO is to constantly test our thinking against evolving circumstances and to make sure that we are delivering value and maximising potential for growth. Ultimately, we felt that an Irish subsidiary would not deliver the added value we are seeking," she added.

While Starling is one of the best known consumer and small business neobanks, it does also have another string to its bow. It’s Banking-as-a-Service arm Starling Engine. 

Headed by Sam Everington, Starling Engine sells banking infrastructure developed from scratch in the seven years since the bank launched to other banks and other financial institutions.

While its first partnership came five years ago, the Engine has been stealthily hatching a plan to sell its services overseas, with Europe its main target destination. 

In July of 2021, Boden said in an open letter to investors that she was excited by the opportunities in embedded finance, the process of offering financial products through third-party non-financial brands, as well as infrastructure to incumbent banks.

“What people need are payment rails and safety barriers; these can be delivered in new and exciting ways. I’m particularly enthusiastic about the possibilities offered by embedded finance, the integration of financial services into non-financial customer journeys, and believe that Starling is well-placed to grab the opportunities arising from this,” Boden said.

“We expect to ramp up our Banking-as-a-Service (BaaS) offering to new and established brands that want to build their own financial capability,” she added.

In December Helen Bierton, chief banking officer at Starling outlined to AltFi how this might play out with international expansion playing a key role in the strategy including looking beyond European markets. 

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