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UK Neobank Starling Will Not Reapply for EU Banking License

Starling Bank

United Kingdom neobank Starling reportedly does not plan to reapply for a European Union banking license.

Instead, the company will try to expand internationally via its software business, incoming CEO Raman Bhatia told CNBC Wednesday (June 5).

“I am very bullish about this approach around internationalization of what is the best of Starling, the proprietary tech versus market by market, idiosyncratic regulatory regime, capital requirements, and building trust and brand extension, which is unproven for any plan,” Bhatia said, per the report.

Starling, which has traditionally offered banking services to its customers — most of them in the U.K. — tried to expand by seeking a banking license in Ireland, which would have granted it access to the EU. The company withdrew that application in 2022.

Bhatia said that rather than applying again, Starling will try to push into new territories by selling Engine, its Banking-as-a-Service (BaaS) software offering, to banking customers, per the report.

“From digital onboarding and identity verification to card issuance and management, Engine is designed as a ‘bank in a box’ that will help financial service providers build tools and apps rapidly,” PYMNTS wrote in 2022 when the product was first unveiled.

Bhatia was appointed CEO of Starling in March, replacing founder Anne Boden, who announced her resignation in May of last year. John Mountain, Starling’s chief operating officer, acted as CEO in her stead.

When Starling withdrew its EU application in 2022, Boden indicated that the company’s expansion strategy would be driven by its software business. Speaking with CNBC this week, Bhatia said he wants to “double down” on the Engine strategy and go after market share in the enterprise software arena.

There is a market for this sort of activity. The PYMNTS Intelligence report “The FinTech-Bank Relationship Shifts Toward Collaboration” found that 65% of banks and credit unions entered into at least one FinTech partnership in the past three years, with 76% of banks viewing FinTech partnerships as necessary to meeting customer expectations. The report also showed that 95% of banks were focused on using partnerships to improve their digital product offerings.

In other neobank news, Dutch firm Bunq said it is planning to expand into the U.K., while Britain’s Monzo announced its first profitable year and the close of a regulatory probe into its anti-money laundering practices.