Challenger Bank Starling Shows BaaS-ic Instinct for Europe

Does "Starling as a Service" have wings?

UK challenger bank Starling has plans to make its Banking as a Service (BaaS) solution offering available in the EU, including France, Germany, the Netherlands and Spain.

It’s aiming for H1 2022, subject to regulatory approval – and it’s another interesting development in the B2B space.

Starling’s CEO Anne Boden states: “The thriving technology and fintech scene in European markets makes them a great fit for the culture of innovation at Starling, and therefore a natural space for us to offer and develop our solutions in Europe.”

She adds: “We have seen a consistent and growing demand for digital financial services, further accelerated by extended lockdowns and a shift in consumer behaviours in key European markets.”

Described as “Starling as a Service” (that BaaS phrase didn’t last long), the digital bank says it will enable businesses to build their own financial products on Starling’s platform, such as savings or current accounts, integrated digital wallets, kids’ cards and debit cards.

Starling handles the technical and regulatory demands behind the scenes, while the businesses take care of their customers with embedded banking solutions.

The challenger launched BaaS in the UK in 2018 and has 25 payment and banking services customers, including Raisin, CurrencyCloud, Moneybox and Vitesse.

Tech Stack and a Confident Mood

The official announcement from Starling was brief, but it’s worth looking at the bank in more detail.

Founded in 2014 by Boden, Starling was granted a banking licence by the Bank of England in July 2016 and launched its first mobile personal current account in May 2017 (available as a mobile app for both iOS and Android phones). The challenger says it launched the UK’s first digital business bank account in March 2018.

It offers business, personal, joint, euro and dollar current accounts alongside a child card. The Starling Marketplace offers customers in-app access to a selection of third-party financial services. Headquartered in London, it has offices in Southampton, Cardiff and Dublin.

In terms of its tech stack, the bank has developed its core banking platform and mobile apps from scratch in-house. It says its systems are cloud-based and running in AWS and Google Cloud Platform (GCP). In answer to an eWeek UK query about its other tech, Starling wouldn’t reveal who it uses for payments operations and card processing. (It’s not Bottomline Technologies or GPS as found in some parts of the internet.)

In its latest trading update it fared better than challenger banks Monzo and Revolut. Revenue rose by nearly 600% to £97.6 million, from £14 million for the previous period, ending 30 November 2019, while loss after tax more than halved to £23.3 million from £52.1 million.

Customer account numbers more than doubled to 2.1 million. It explains that it has more than 2.3 million open accounts; 1.8 million retail current accounts, 374,000 accounts for SMEs and 126,000 euro and US dollar accounts.

It broke even for the first time in October 2020 and made a profit each month since then. Boden is in a confident mood (that never changes) – and reckons Starling is “very much on track to post our first full year of profitability” in its 2022 fiscal results.

Starling made its first acquisition earlier this year – when it bought specialist buy-to-let mortgage lender Fleet Mortgages in a £50 million cash and share deal.

In August the bank made it to the top of the charts for business banking on its first time of being included in the Competition and Markets Authority’s tables. These results are from an independent survey carried out between July 2020 and June 2021 as part of a regulatory requirement.

You can learn about Starling’s rivals in the article ‘The Fiery Force of Challenger Banks’.

Antony Peyton
Antony Peyton
Antony Peyton is the Editor of eWeek UK. He has 18 years' journalism and writing experience. His career has taken him to China, Japan and the UK - covering tech, fintech and business. Follow on Twitter @TonyFintech.
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