UK-based digital-only bank Starling has secured £60 million ($77.3 million) in a Series C funding round led by Merian Global Investors, per a press release.
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Starling further said it recently raised an additional £15 million ($19.3 million) from its existing investor Harald McPike, bringing the total funds to £75 million ($96.7 million). The neobank, which has 460,000 personal accounts and 30,000 small- and medium-sized business (SMB) accounts, anticipates reaching 1 million clients by year-end.
It will use the funds to invest in its products and accelerate its global expansion efforts, starting in Europe. The neobank plans to first launch in Ireland later in 2019 before looking at Germany and France, per the FT.
The region’s digital-only banking market is maturing, with neobanks offering a great suite of products and services and expanding outside their home markets. Starling initially went to market with its current accounts and has since expanded into personal loans and SMB banking.
Further, the startup operates a marketplace and has also expanded its Payment Services and Banking-as-a-Service (BaaS) offerings by white-labeling its technology in the UK. This is a common pattern among the region’s digital-only banks: Revolut, Monzo, and N26 are also constantly bringing new products and services to market, for example. And we’ve also seen neobanks expanding outside their home markets, with N26’s clientele spanning across 24 European markets and Revolut supporting customers in 31 countries around the globe.
Of note, these startups are now eyeing a US launch: N26 and Revolut are looking to launch in the region during Q1 2019, and Monzo is also prepping for a move in the country.
We’ve recently seen significant investment in European neobanks, which could indicate investors recognize these players as winning bets. N26 secured a $300 million funding round last month, and Monzo raised £85 million in late 2018, for instance — with both reaching unicorn status as a result. As VC-backed funding and support remain plentiful for digital-only banks in the region, we expect those players to scale further in 2019, attracting more customers and offering a greater variety of products.
Neobanks’ agility, customer-centric culture, and ability to attract high-profile backers to continually support their aggressive growth plans have placed these players at the forefront of the banking industry’s ongoing transformation — and we expect the line between neobanks and incumbent banks in Europe to become blurrier in 2019.
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