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UK digital-only bankStarlinghas obtained a restricted banking license allowing it to test its systems with a limited number of customers.
It is now inviting prospective users to sign up and plans to launch alpha and beta tests of its product later this year, ahead of a full launch in January 2017 . Other new UK digital-only banks Tandem and Atom received licenses in 2015.
Starling has suffered a number of setbacks. Starling initially hoped to gain a license and launch its product by the end of 2015, but it lost a number of executives early in the year, including ex-CTO Tom Blomfield. It also saw a fundraising round in January 2015 fall apart, due to high consultancy fees associated with building, rather than buying IT systems, according to the Financial Times. Starling raised $70 million this past January.
Digital-only banks need to differentiate to attract customers. The UK banking market is increasingly crowded, with high street banks and a raft of new digital-focused challenger banks already competing for market share. There are also at least 20 more new market entrants going through the licensing process, according to PwC.
In order to stand out, Starling will have to offer something significantly better than its competitors — so far all we know is that it plans to launch only one product, a current account, and that it will leverage customer data to provide personal finance management and "smart notifications."
Companies such as Starling show that we’ve entered the most profound era of change for financial services companies since the 1970s brought us index mutual funds, discount brokers and ATMs.
No firm is immune from the coming disruption and every company must have a strategy to […]
