Mar 9, 2021

Digital bank Starling achieves unicorn status

Starling
Digital
bank
Unicorn
William Girling
2 min
Digital bank Starling achieves unicorn status
Following a £272m Series D funding round, Starling Bank has reached a valuation of £1.1bn and secured ‘unicorn’ status in the fintech startup mark...

Currently one of the fastest-growing and most popular banks in the UK - it has won ‘Best British Bank’ for three years consecutively since 2018 - Starling is also the first digital-only bank to reach profitability.

Now in its fourth year of operation, the company’s momentum doesn’t appear to be slowing: it has two million active accounts, lending exceeds £2bn, deposits have reached £5.4bn, and Starling gains a new customer approximately every 39 seconds.

The Series D was led by Fidelity Management & Research Company in conjunction with Qatar Investment Authority, RPMI Railpen, and Millennium Management.

Digital banking reaches a tipping point

Starling’s visionary CEO and Founder Anne Boden recently topped our Top 100 women in fintech list, which recognised her industry experience, creativity and strong leadership.

Commenting on the bank’s new investment, she said, “Digital banking has reached a tipping point. Customers now expect a fairer, smarter and more human alternative to the banks of the past and that is what we are giving them at Starling as we continue to grow and add new products and services. 

“Our new investors will bring a wealth of experience as we enter the next stage of growth, while the continued support of our existing backers represents a huge vote of confidence.”

With so much already accomplished, the company is reportedly charging ahead with new growth opportunities, including both domestic and international expansion (specifically in Europe).

Going for an IPO?

Rumours at the end of last year suggesting that Starling might be put up for sale were resoundingly quashed by Boden. Instead, an IPO in 2022 is being touted as the company’s next big development.

Competition in the digital banking space is likely to accelerate as incumbents continue to improve their own offerings. For now, at least, Starling maintains a commanding lead in both popularity and long-term sustainability. Its developmental trajectory could arguably shape UK fintech for years to come.

Image credit: Starling

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Jun 17, 2021

Zafin: Banking is now in the era of the tech ecosystem

Zafin
Banking
Technology
Digital
3 min
FinTech Magazine holds a Q&A session with John Smith, EVP Ecosystem at Zafin, on the evolution of banking and its future as an aspect of tech ecosystems

The development of tech ecosystems is placing the future of post-COVID banking in jeopardy. At a time when Big Tech can replicate the functions of traditional financial institutions, what can banks do to retain a grip on the market?

John Smith, EVP Ecosystem at Zafin, has a few ideas. A SaaS cloud-native product and pricing platform for financial institutions, Zafin is preparing the next generation of banks to cope with this precise challenge.

Smith is responsible for the strategic and tactical management of the company’s ecosystem, including the creation of new business models to support growth and differentiation. We asked him four questions:  

Q. Have the events of the pandemic caused an irreversible shift in the digitalisation of banks? If so, is COVID the sole cause or are there other factors?

It’s a great question and one that I am asked a lot. Without a doubt, the COVID-19 pandemic has driven a significant shift in the acceleration of digital. In fact, I’ve seen some estimates show there to have been as much as four to six years of digital adoption growth since the initial lockdown started. 

While the pandemic may be the primary reason for this growth, two other drivers include fintech disruption and the high costs of operating a traditional retail bank. Both of these factors have caught the attention of banking executives as they set their minds on accelerating digital transformation with a focus on high return, low risk. 

Q. Some commentators believe banks must learn from Big Tech in order to survive. Do you agree? Please expand. 

I agree completely; we’re living in the era of the ‘ecosystem’. All the seismic shifts we’re seeing in technology, be it aggregation, embedded finance, DeFi or hyper-personalisation are all enabled by the foundation of an ecosystem.  

When financial institutions work with a strategic partner like Zafin, which has made the strategic investments in a best-in-class ecosystem, they’re able to capitalise on opportunities more quickly and safely, and will be better positioned for growth now and at the other side of the pandemic. 

Q. What are currently the obstacles to adopting Open Banking? Is it more likely to 'take off' in some regions rather than others?

I would argue that Open Banking has been in the US for some time and will only continue to grow there. By definition, Open Banking is about the secure sharing of financial information that customers are aware of and have authorised. Under that definition, we’re seeing aspects of this well underway even though its full potential remains to be seen.

Third-Party Providers are a natural outcome of Open Banking, whereby they can create propositions beyond what a bank normally does to enable banking functions such as payments, borrowing, saving and so on. Once again, some of these are already present through industry-led initiatives, whereas regions such as the EU have taken the pathway of regulation such as PSD2.  

The industry-led initiatives we’ve seen in the US have also had the added advantage of guard-rails that regulatory bodies like FFIEC and CFPB provide. There are also other technology-led initiatives such as API definitions that are set out through the FS-ISAC. 

I would argue the future of Open Banking in North America will be through the natural evolution of the guidelines and API definitions that have been published, as well as the natural progression of industry initiatives. 

Q. Are there any other bank tech trends you'd like to discuss? 

Coreless banking. Zafin has been pioneering some of the work around externalising functions out of the legacy core to drive a more ‘fintech nimble’ bank, while not having to deliver a ‘heart and lungs’ core bank replacement.  

 

 

Real life examples of this include moving some of the core functions of a banking system, such as product and pricing to a platform like Zafin. Origination, onboarding, KYC, risk, and compliance are all other examples of externalising banking functions for added agility.

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