“We’re in a very dangerous phase,” said Starling Bank CEO Anne Boden in a session at the ongoing Money2020 Europe conference in Amsterdam when describing the heightened exposure to fraud caused using cryptocurrencies.
It’s a reason, she said, the U.K.-based neobank has so far steered away from digital assets, instead focusing on protecting unsuspecting customers from increasing scam risks, particularly in countries where crypto wallets are directly connected to real-time payment schemes.
“We’re spending far more of our time protecting customers from [crypto] scammers than we are trying to promote crypto,” Boden told the audience, adding that European banks need to implement far tougher know your customer (KYC), anti-money laundering (AML) and onboarding procedures to curb the growing trend.
“Our AML and our onboarding processes are as good as the weakest link, and I think some of these organizations are the weakest link,” she argued.
She said, however, that Starling’s decision to steer away from virtual currencies could change over time, hinting at the possibility that they will be “much more involved in the space” in the future.
For now, the U.K. digital bank seems to have done well without digital assets, hitting profitability 18 months ago as one of the few, if not only, U.K. neobanks to have achieved that milestone.
Related: UK Digital Bank Starling Hits £2.5B Valuation
In April, Starling saw its valuation double to over £2.5 billion ($3.15 billion) after raising £130.5 million ($164 million), earmarked for building on the expansion it experienced over the pandemic and facilitating more acquisitions.
Read more: Digital Banking App Provider Ranking Strikes Gold with 3 Perfect Scores
And as a further sign of business tailwinds, the bank gained two positions in the latest edition of PYMNTS’ Provider Ranking of Digital Banking Apps to rank third on the global list, while also adding three points to its score to make it a “mover and shaker.”
Confirming reports, Boden said Starling is also considering an initial public offering (IPO) at the end of 2023 or early 2024, a “reasonable expectation” given that they “do not need to IPO and can actually pick our own timing for this.”
Growing Assets, Acquiring Lending Platforms
Despite operating a profitable business, Boden said the constant challenge they will continue to grapple with is growing the asset side of the balance sheet, while expanding their 3% retail market share and 8% SME banking share in the U.K. market.
Read also: Starling Expands Digital Banking to Europe
The London-based bank is also looking to pursue an aggressive acquisition strategy, adding to the £50 million purchase of the buy-to-let lending operation of Hampshire-based Fleet Mortgages, its first acquisition, completed last July.
According to Boden, they intend to leverage the billions of pounds of depositor’s funding it has to acquire some lending platforms, including those that are suffering from a shortage of funding lines.
Learn more: London FinTech Starling Bank Boycotts Advertising on Meta Over Scammers
“At the moment our customers are profitable, we have over £9 million in deposits. Our strategy now is to build up that profitability and the profitability per customer even further by doing better lending,” she said.
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