Digital Bank Startup Starling Raises $70M

Starling Bank has recruited a former regulator and a number of industry heavyweights for its board while raising $70M to spearhead its attempt to move into the UK banking market.

Starling, founded by Anne Boden, the former Chief Operating Officer of Allied Irish Bank, is aiming to lure mobile-focused customers and provide a superior current account service to those offered by the incumbent high-street banks.

Starling has raised $70M of investment from Harald McPike, the Founder of QuantRes, a Bahamas-based quantitative investment manager.

Starling Bank will provide people with the kind of innovative leaps in their financial lives that they have experienced in transportation and video streaming, so this is an investment opportunity I could not pass up, he said.

Starling, which is awaiting regulatory approval to launch, revealed on Monday that it has appointed Oliver Stocken—who previously served as a non-executive director of Standard Chartered—as chairman.

Victoria Raffé, Marcus Traill and Craig Mawdsley are joining as non-executive directors, alongside Mark Winlow and Steve Colsell, who were appointed earlier in 2015.

Ms. Raffé spent two decades at the Financial Conduct Authority after holding a number of senior positions at Fidelity, Prudential and KPMG. Her final role was director of authorisations and left in a shake-up a year ago.

Mr. Traill has held a number of senior positions at QuantRes, alongside Mr. Mawdsley. Mr Colsell has served as Chief Financial Officer within divisions of Lloyds Banking Group.

Ms. Boden said, Our aim is clear—to bring about a revolution in retail banking by developing an account architecture, using the latest available technology, designed to meet the needs of the modern customer.

Players like Atom, Mondo, Secco and CivilisedBank are in the quest to build mobile-centered alternatives to the small collection of giants that have dominated British banking for decades.

Recently, Tandem—a digital banking startup led by Azimo founder Ricky Knox and Capital One’s Matt Cooper—has been granted a license by the Bank of England. The startup will now begin the process of constructing its technology platform and meeting capital requirements.

The UK is going through a chain of developments in digital-only banking. Many new startups are coming forward with the perspective of combining banking with technology. The financial regulators are encouraging competition in the retail banking.

The transformation can be seen in the latest report by the Timetric's "The Cards and Payments Industry in the UK: Emerging Trends and Opportunities to 2019." The report provides a detailed analysis of market trends in the UK cards and payments industry. It provides values and volumes for a number of key performance indicators in the industry, including check payments, credit transfers, direct debits, payment cards and cash transactions during the review period (2010–2014).

Key Highlights:

The emergence of digital-only banks is likely to accelerate a shift towards electronic payments in the UK. Atom Bank, which was granted a banking license by the Bank of England in June 2015, may become the country's first digital-only bank, allowing consumers to conduct banking transactions entirely online and via mobile phones. Other digital-only banks, such as the Tandem Bank and Starling Bank, are also making their debut into the market.

It is quite evident that the new services digital banks have created are tough competitors for high-street giants. The interesting part will be to see how these traditional banks will come up new solutions to win the race.