• Elaine Deehan, Head of Banking as a Service for Europe at Starling Bank


• 21.09.2021 06:47 pm

What are the key features of the competitive landscape?

Interview with Elaine Deehan, Head of Banking as a Service for Europe, Starling Bank

Financial IT: Along with Monzo, Atom, Monese and Revolut, Starling Bank is one of a group of challenger banks that have emerged in the UK in the last eight years or so. Are these really your competitors? Are there any other names that you would add?

Elaine Deehan (ED): We are indeed often compared with the names that you mention. However, they are not really our rivals.

Our own view of Starling Bank is that - along with the other challengers - we are taking on the established financial institutions, whose names are well known.

Put another way, the challengers are not in competition with each other: they are a collective that is in competition with the incumbents - here in the UK and elsewhere.

Financial IT: As a collective, what are the key elements of the strategy that you are all following as you take on the incumbent players?

ED: If you look at what each of us is doing, you will find three major themes.

First, we are all using new technology to deliver products that retail and small business customers need in their day-to-day lives. 

Moreover, those products are delivered in a way and at a price level that the customers perceive the products as offering value for money. That means that great user experience with websites or apps is absolutely essential.

Third, we all invest in our brands.

Financial IT: What about regulation? Where does it fit into all of this?

ED: The regulatory framework is a very important part of the overall competitive landscape.

In particular, we see being regulated as a bank as being a real source of competitive advantage. It is a key element of our strategy. Having a banking license means that we can pursue lending as a profitable business: it’s something that you cannot do as a non-bank.

We have been profitable since October 2020.  Having a banking license and being able to lend has been central to that. 

Each of the other organisations that are part of the collective and that are taking on the incumbent banks have their own strategy. What really matters, though, is that not all of them are actually licensed as bank. 

The difference between being a bank and being a non-bank is really important.

Financial IT: Can you be more specific?

ED: Over time, we have developed the technology to reach our own clients. When we approach potential clients with our BaaS proposition, we can assure them that the technology is tried, tested and sufficiently robust to support rapid growth. We have about 2.4 million accounts, with a strongly growing deposit base and, as noted, have been profitable for about a year now.

Above all else, though, the technology ensures that we - and therefore our BaaS clients - can comply with all the requirements that must be met by a licensed bank. 

This is a claim that, by definition, an organisation that is a non-bank could not make.

Financial IT: What is the Banking-as-a-Service (BaaS) that is being offered? 

ED: Starling is already known for its BaaS offerings - such as our Starling Payments Services. Licensed institutions can take advantage of the fact that we are a part of the Faster Payments scheme in the UK.

However, BaaS involves much more than just payments. Our proposition is that Starling Bank has developed successfully on the basis of its own technology and systems: through BaaS, we offer all of the technology and systems to other companies that have ambitions in the UK or EU banking industries.

Our potential clients come from two broad groups. One is, of course, newcomers to collective of challengers who, in some way, seek to take market share from incumbent banks. Building a bank is a hard and expensive endeavour. We provide a shortcut that solves all the technological and regulatory problems.

The other group of potential clients includes non-financial companies who are looking to embed financial services in their offerings to their own clients. Obviously, something that is really important to these organisations is user experience (UX). That is something where we can help them.

BaaS clients can offer their customers anything that Starling does, but from within their own platforms.

We have already inked BaaS deals here in the UK. Subject to regulatory approval, we should be expanding in the EU in the first half of 2022.

Financial IT: How important is the business of offering third party financial services to clients? What are the main products that are being offered?

ED: Through our Starling Marketplace, we offer other companies products and services to our customers. Our customers can link those products and services to their own accounts. The products include accounting packages so that our customers can more easily administer their own affairs or pensions.

The Starling Marketplace is an important part of the Starling ecosystem and will likely be an important contributor to our overall growth going forward.

Financial IT:Taking a three year view, how is Starling Bank likely to change?

ED: We expect to be larger, by all metrics that matter. We are particularly keen to grow our SME business. We will further develop our lending proposition. Within that period, we should also be well established in the EU as a BaaS provider. 

It is also no secret that an Initial Public Offering (IPO) is on the cards at some stage.

The vision and determination that we have to transform banking for good will remain unaltered.

Our strategy has been proven and will remain in place.

Starling Bank is an award-winning, fully-licensed and regulated bank built to give people a fairer, smarter and more human alternative to the banks of the past. It offers personal, business, joint, teen, euro and dollar accounts alongside a child card and a range of lending products. Starling also provides B2B banking and payments services through its Banking-as-a-Service model based on the proprietary technology platform that it uses to power its own bank. The Starling Marketplace offers customers in-app access to a selection of third party financial services. Headquartered in London, it has offices in Southampton, Cardiff and Dublin.