Starling Bank has raised £60m as the UK challenger bank prepares for European expansion.
The London-based app-only lender said the cash will allow it to “ramp up our growth” as it bids to become “a world-leading digital bank”.
The bank has opened 1.25 million customer accounts and holds more than £1.25bn in deposits since it was launched six years ago.
Starling received the cash from existing investors, UK-based private equity business Merian Global Investors and the family office of Bahamas-based billionaire Harald McPike. McPike’s vehicle, called JTC, is the majority holder in Starling.
‘Huge endorsement’
This investment follows two funding rounds totalling £105m led by Merian last year. Overall, the digital bank has raised £322m since it was launched by founder and chief executive Anne Boden (pictured) in 2014. The business would not comment on its overall valuation.
Former Allied Irish Banks chief operating officer Boden said: “The support of our existing investors represents a huge endorsement of our business strategy, as we continue to ramp up our growth.
“We’re constantly innovating and have big ambitions to turn Starling into a world-leading digital bank.”
The bank said last February it was targeting growth in Ireland, France and Germany.
Staff share options
It competes against rivals such as the UK’s Revolut and Monzo, as well as Germany’s N26.
Starling is well-regarded among the crop of digital banks that have sprung up in recent years to challenge high banks on customer service, lower fees and convenience. It regularly tops polls for service standards.
Nick Williamson, co-manager of Merian Chrysalis Investment, said: “Starling has continued to innovate and has already established itself as one of the most highly-regarded UK challenger banks. Its superior user experience is winning over retail and business customers and we believe 2020 is set to be a defining year for the business.”
The bank also added it will award shares to all its 800 employees allowing “everyone in the company to share directly in its success”.
Loss-making
Starling staff and management will own 20 per cent of the business after the deal is completed, with Merian and JTC controlling the rest.
However, the bank, like most fintechs, remains a loss-making business, saying last August said it would break even this year.
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