Starling Withdraws Irish Bank Application Shifting Expansion Plans

British digital lender, Starling withdrew its banking license application with the Irish central bank, bringing a major shift toward its European expansion plans.

As confirmed in a memo sent to the bank’s 2,000 employees, which was first reported by Sky News, Starling scrapped its plans to establish a retail banking unit in Ireland after four years. It publicly announced its intention to secure an Irish license in 2018 but then temporarily paused the talks with the regulator in 2020, citing the pandemic.

“Sometimes changing course is the right option,” Anne Boden, the Founder and CEO of Starling, wrote in the memo.

“My job as CEO is to constantly test our thinking against evolving circumstances and to make sure that we are delivering value and maximizing potential for growth… Ultimately, we felt that an Irish subsidiary would not deliver the added value we are seeking.”

The digital bank is now eying to expand offering software-as-a-service (SaaS) to banks, aiming at their digital transformation strategies. In addition, it has plans to explore new areas of lending like using surplus assets for acquiring mortgage asset portfolios.

“We'll now be focusing on taking our software to banks around the globe through our Software as a Service subsidiary, Engine and by expanding our lending across a range of asset classes, including through targeted M&A activity,” Boden added.

The Digital Banking Push

Starling Bank was founded in 2014 by Anne Boden, who took up entrepreneurship after a long career in the financial industry. The digital bank operates with a UK license and offers retail, business and trader accounts. It has 3 million customer accounts including almost 500,000 accounts of SMEs.

Earlier this year, Starling closed an internal funding round, raising £130.5 million at a pre-money valuation of £2.5 billion.

Meanwhile, the digital bank faced criticism from former Treasury minister, Lord Agnew for handling loans written under the emergency Covid schemes. However, Boden called these claims 'defamatory' and even threatened legal action.