Starling set to expand business banking to the US
Starling Bank has confirmed that its push into the United States will focus on business banking technology rather than competing for retail customers, with chief financial officer Declan Ferguson describing the US retail market as "massively overserved".
Speaking about the strategy, Ferguson said: "The opportunity for a UK retail bank to be successful there is limited. I can't see what the unique selling point is." Instead of pursuing a full US banking licence, Starling plans what Ferguson called a "more modest acquisition" to establish a presence within the next two years.
The expansion will be led by Engine, Starling's business-to-business platform launched in 2022. Engine markets itself as a cloud-native, complete banking platform that lets clients build and enhance services such as digital onboarding and savings accounts. The unit has already incorporated a Delaware subsidiary and appointed former McKinsey partner Jody Bhagat to head its US push from a New York base.
According to reporting from Bloomberg, Starling is targeting a nationally chartered East Coast bank with around $2 billion in assets, ideally one running outdated digital infrastructure that would benefit from a technology overhaul. Recruitment of US-based bankers is expected to begin over the summer.
Engine now has roughly 300 staff and recently signed Tangerine Bank, a subsidiary of Canada's Scotiabank, as its largest client to date.
The move sets Starling apart from its UK challenger peers. Monzo recently pulled out of the US market, while Revolut is pursuing a full national banking licence. Starling's bet is that selling its software stack to mid-tier American lenders is a more pragmatic route into the world's largest banking market than going head-to-head for consumer accounts.
