Standard Chartered is using the technology of a digital challenger bank to enable it to quickly launch a new product.
The bank is using Starling Bank’s banking-as-a-service (BaaS) offering to build a new investment platform offering customers the opportunity to invest in green and sustainable projects.
The UK platform, known as Shoal, has been launched by Standard Chartered’s SC Ventures innovation unit. The platform enables savers to ensure their money is invested in initiatives to fight climate change.
Large banks such as Standard Chartered traditionally take longer to launch new products and services in comparison with more agile, often cloud-native, digital competitors, but Starling’s BaaS provides finance firms access to its application program interface (API) services without the tech investment.
Banks are increasingly looking to work with fintech suppliers to access the latest technologies and development techniques. According to a recent survey by Lloyds Bank, about half of the UK’s financial services companies plan to increase investment in fintech through acquisitions and partnerships over the next 12 months.
Launched in 2018, Starling’s first BaaS customer was savings fintech Raisin. In the UK, it now has more than 25 customers, including CurrencyCloud, Moneybox and Vitesse.
“Starling’s BaaS proposition has enabled Shoal to develop and build a unique product at scale and at speed,” said a Standard Chartered statement. “Using Starling’s technology and APIs, payments can be made instantly into sustainable savings funds with Shoal.”
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Because Starling’s platform has already been approved by regulators, the new Shoal platform meets regulatory requirements. All accounts will also be protected by the Financial Services Compensation Scheme through Starling’s banking licence. “This model enables Shoal to focus on customer acquisition and service, and delivers a front-end app with a superior user experience while Starling ‘powers’ the overall solution,” added Standard Chartered.
The Shoal product will be available in the Starling Marketplace.
Bill Winters, CEO at Standard Chartered, said: “Our vision is to become the world’s most sustainable and responsible bank. While we looked to the COP26 conference to accelerate government action, our partnership with Starling Bank is an example of the private sector taking decisive steps to scale climate investment.”
Anne Boden, founder and CEO at Starling Bank, said: “We are pleased to deploy Starling’s banking-as-a-service proposition in partnership with Standard Chartered to help their customers live ever more sustainably. Starling will handle the technical and regulatory demands behind the scenes, leaving Shoal to take care of their customers.”
App-based Starling Bank was designed by Boden, a banker with an IT background. It aims to use modern technology to make banking as convenient as possible, while enabling customers to benefit from the data they generate in their everyday lives.
As a company that leads on tech, with a tech-heavy workforce, the banking-as-a-service model is a natural fit alongside the more traditional services of a bank.
In 2016, Starling received its UK banking licence, and last year it became the first UK digital challenger bank to report a profit. The £800,000 operating profit for the month of October, which appears insignificant in a sector where profits are counted in billions, was a major milestone. Earlier this year, it achieved unicorn status after a funding round took its value above £1bn.