Goldman-supported Starling has no intention of seeking EU banking license, growth to be driven by software technology.

Starling, a digital bank based in the UK, has announced that it will not re-apply for a European Union banking license. The company plans to focus on international expansion through its software business instead. The decision diverges from the strategies of some of its competitors in the neobank space. Starling, founded in 2014, has attracted 4 million customers and was last valued at £2.5 billion. The digital bank offers traditional banking services like current accounts and recently ventured into lending.

Backed by Goldman Sachs, Starling initially sought to expand internationally by applying for an Irish banking license. However, the company withdrew the application in 2022. The new CEO, Raman Bhatia, revealed the company’s international expansion plans, emphasizing the role of Engine, a software platform that Starling sells to other companies looking to establish their own digital banks. Bhatia believes that this approach will be more effective than applying for individual licenses in different countries with varying regulatory requirements.

In a statement at the Money 2020 conference, Bhatia expressed confidence in the potential for international growth through Engine, highlighting opportunities in regions like Thailand and the Middle East. The company’s unique model focuses on selling technology to other banks, a departure from the consumer-focused strategies typically adopted by neobanks. Salt Bank in Romania and AMP in Australia are already using Starling’s Engine platform, marking the company’s first customers in this new venture.

Bhatia intends to “double down” on the Engine strategy and aims to expand Starling’s presence in the enterprise software market. By capitalizing on the demand for digital banking solutions, the company hopes to secure a significant market share in this sector. The decision to prioritize software sales over acquiring individual banking licenses represents a strategic shift for Starling, reflecting a more cost-effective and scalable approach to international expansion. Unlike some neobanks that focus solely on consumer-facing applications, Starling is leveraging its technology to target a broader market of financial institutions seeking digital solutions.

Overall, Starling’s decision to pivot towards software sales for international growth marks a strategic shift in the neobank space. By leveraging its proprietary technology through Engine, the company aims to expand its presence in global markets without the need for individual banking licenses. The potential for growth in regions like Asia and the Middle East presents significant opportunities for Starling to establish itself as a key player in the enterprise software space. With a solid foundation of 4 million customers and a valuation of £2.5 billion, the company is well-positioned to capitalize on the demand for digital banking solutions in the international market.