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Challenger bank Starling gets UK banking licence

Starling Bank, which will offer smartphone-based current accounts, has been given a UK banking licence

UK digital bank Starling Bank will launch in January next year after receiving a licence to operate from the UK financial services regulators.

Starling is one of a growing group of challenger banks in the UK. It will offer current accounts only, operated via customers’ smartphones, and use the latest mobile and data technologies to support digital lifestyles. 

The bank’s founder, Anne Boden, is an IT professional who got into banking. Armed with a BSc in computer science and chemistry, and an MBA, she joined Lloyds Bank in the early 1980s where, she said, she was doing fintech before fintech was fashionable.

“For the past year, our team has been focused on building our product and technology from the ground up,” Boden said.

“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.”

Read more about challenger banks

Part of the appeal of challenger banks lies in their ability to  invest  in the latest technologies without being held back by the burden of legacy technology. Starling plans to use best-of-breed components in its banking system. 

From day one, the bank will have payment, card processing and risk systems, general ledgers, a ledger system for current accounts, security systems and state-of-the-art apps. All will be in a private cloud.

The bank will use software-as-a-service (SaaS) tools for its infrastructure. Bespoke functionality will be bought or built in-house.

Recent research from Gartner revealed that traditional financial services IT suppliers have not responded quickly enough to the demands from banks. It forecast that 25% of banks will go to startup IT suppliers for their online and mobile  requirements  by the end of 2019.

Read more on IT for financial services