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Starling Bank gets UK licence but doubts remain about prospects for challenger banks

Another challenger bank is set to hit the UK after Starling Bank obtained its UK banking licence ahead of its planned January 2017 launch.

The digital bank, which was founded in 2014 by former COO of Allied Irish Banks Anne Boden, joins the likes of Metro Bank and Atom, alternative banking firms set up to challenge the hegemony of the UK’s ‘big four’ banks, who have launched streamlined, consumer-focused services in recent years.

London-based Starling, much like Atom, is focused on providing a digitally-native banking experience, focusing on ‘data-led’ insights to give customers an overall picture of their financial circumstances combined with the latest security features and real-time notifications.

Anne Boden, Chief Executive at the bank, commented: “We are delighted to have the confidence and support of the regulator, to move forward and introduce a new style of banking.

“For the past year, our team has been focused on building our product and technology from the ground up. By 2020, the number of UK mobile banking users will double from 17.8 million to 32.6 million and our aim is to empower these people to better manage their finances with an incredible app, purpose-built for those who happily manage their lives on their phone.”

Following confirmation of regulator approval, the bank has also unveiled new branding and launched its website to gear up for its January launch, along with the announcement that it has joined the Faster Payments service to provide customers with 24/7 payments.

It comes as the prospects of challenger banks have been questioned in recent weeks, after the Bank of England deemed them to be at higher risk post-Brexit, with stocks in challenger banks slumping to record lows following the EU referendum.

However, share prices have rebounded somewhat in the past 48 hours and come Starling’s launch in January the picture may be significantly clearer as to the UK’s long-term economic prospects.

Starling is also aiming to capture the massive increase in mobile banking users in the next four years, with numbers expected to almost double from the current number of 17.8m users to 32.6m by 2020.

One thing for certain is that, regardless of the current fiscal uncertainty, the flood of next-generation challenger banks shows no signs of abating, with around 20 banks currently in discussions with the Bank of England in the hope of snagging a UK banking licence.

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