Goldman-backed Starling says no plans to pursue EU bank license, expansion to come from software

AMSTERDAM — Digital bank Starling will not re-apply for a European Union banking license and instead pursue international expansion through its software business, the incoming CEO said, in a diverging approach to overseas growth from some of its rivals.

Starling is among the U.K.’s breed of so-called “neobanks” — digital-only banks that usually have no branches. It started life in 2014, has racked up 4 million customers and was last officially valued at £2.5 billion ($3.2 billion).

The digital bank, which is backed by Goldman Sachs, has traditional offered banking services, like current accounts and more recently lending. Starling’s customers are mainly in the U.K. The company sought to expand abroad by applying for an Irish banking license, which would have given the bank access to the European Union market. Starling withdrew that application in 2022.

Raman Bhatia outlined the company’s international expansion plans on Wednesday, in his first public remarks since his appointment as CEO in March, taking over from founder Anne Boden.

Bhatia said that the company has no plans to re-apply for the EU banking license to push into new countries. Instead, international expansion will be driven by Engine, a software platform that Starling sells to other companies, so they can set up their own digital banks.

“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 during a fireside chat at the Money 2020 conference moderated by CNBC.

He described opportunities in places like Thailand and the Middle East as “immense.”

Engine is a unique model amongst neobanks, which have tended to pore over consumer-focused apps and services. Starling is betting it can sell the technology to other banks.

Salt Bank in Romania and AMP in Australia are Starling’s first Engine customers.

Bhatia said he’d like the “double down” on the Engine strategy and capture market share in the enterprise software space.