The first of Britain’s digital-only challenger banks to launch into the current account market is kicking off talks with investors about a new funding round to propel its international expansion.
Sky News understands that Starling Bank, which was handed a banking licence by UK regulators last year, has appointed Quayle Munro, an advisory firm, to oversee the fundraising.
People close to Starling said it would be seeking £40m from investors, a sum that would nearly double the amount it had raised previously.
The prospective valuation of the company if it raises the new capital was unclear on Thursday.
Starling, which is run by former Allied Irish Banks executive Anne Boden, intends to use the new money to extend its services to other European markets.
The first of these is likely to be in Ireland, where the company recently received a passport that will allow it to provide banking products across the European Union.
Insiders said the bank was also working on other services for its domestic UK customer base.
Starling’s development to date has largely been funded by Harald McPike, a wealthy quant trader, who invested £48m in the company in 2015.
The timing of its latest fundraising effort is intriguing because it coincides with plans by a number of other challenger banks to attract hundreds of millions of pounds of new capital.
Atom Bank, Monzo and Tandem Money have all launched major fundraising campaigns in recent months amid the continuing race to draw customers into a new breed of digitally led lenders.
Starling has deviated from the strategies of its competitors, however, by launching into the current account market, whereas others, such as Atom, have deferred such a move, citing high costs and uncertainty about regulation.
A new regime to make it easier for consumers to change current account provider has had some effect on the market, but most consumers have ignored the ability to switch, leaving the market concentrated in the hands of Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland and Santander UK.
Source: SKY News