Starling Bank, backed by Goldman Sachs and valued at £2.5 billion, is abandoning its plans to become a European bank. Its application for a license in Ireland, which was intended to enable it to offer its services in European Union countries, was recently cancelled.
Dedicated banking services for individuals and businesses
Founded in 2014 by Anne Boden, ex-COO of Irish bank Allied Irish Banks (AIB), Starling Bank offers a mobile app with various banking services for individuals and businesses alike. This allows users to view their account balance in real time, make standard bank transfers or international payments, instantly activate or deactivate their bank card and send money to loved ones from their phonebook.
The startup goes even further by analyzing customer data via machine learning algorithms to further adapt to their needs. For example, customers can receive alerts when they have spent more money than usual over a certain period.
In 2021, the London-based neobank announced a Series D capital raising of £272 million, or almost €317 million, from Fidelity Management & Research Company. Last April, it also successfully raised $130 million. Its valuation now stands at £2.5 billion. With the funds raised, Starling Bank was planning to finance its expansion in Europe, at a time when numerous players are steadily establishing themselves in this sector. However, the company has decided to scale back its ambitions.
Starling Bank renounces its European banking license
The application for a European banking license initiated by the neobank 4 years ago was intended to enable it to expand its business in Ireland and other European Union countries. However, Starling Bank decided to forego this opportunity.
"We considered that the establishment of an Irish subsidiary would not, in the end, provide the added value we were looking for," said Anne Boden in an internal message, reported by Sky News.
While N26 and Revolut will not see the arrival of a serious competitor on the French market, other fintechs such as Treezor, Solaris Bank and Akéa Banking Services have more to worry about. Indeed, outside France, the startup is banking on the development of its "banking-as-a-service" activities.
"We will now concentrate on supplying our software to banking groups around the world [...] and expanding our lending activities in various asset classes," adds Anne Boden.
Sterling Bank's decision to concentrate its activities mainly in the UK comes at a time of particular concern for fintechs, with the return of inflation and rising interest rates deterring investors.