Starling Bank has created a US subsidiary where it will target mid-sized banks with its banking software as a service (BaaS) offering.

The tech operation of Starling Bank has already won customers in Europe and Australia for its platform, which was originally launched in the UK in 2018 and rebadged as Engine in 2022. Its first BaaS customer was savings fintech Raisin.

In 2021, it expanded its BaaS sales operation into continental Europe, and has since launched in Australia.

The US operation will be the business’s first overseas subsidiary, with a regional headquarters planned for the US East Coast.

It’s not just banks taking up BaaS platforms. Non-banking businesses such as retailers, ecommerce companies and distributors are increasingly looking to offer financial products to their customers. This could be credit, loans or even debit cards.

To provide these services, however, they need to be regulated and have access to expensive banking tech, so businesses are instead using financial services offered by banks and fintechs. The application programming interface-driven services are regulated through the bank, which also provides the tech infrastructure.

In the past, financial services firms and retail businesses have partnered with banks to offer financial services, whereby they brand the front end, but the banking service, which includes the systems and regulatory approval, is provided by a traditional bank. However, demand for financial services to be embedded into services is has changed this.

According to Starling, the US presents significant opportunities for Engine sales due to the large number of mid-tier banks, community banks and credit unions, “many of which are keen to launch new digital services for their customers”.

Starling was founded in 2014, and it received its banking licence in 2016, launching the following year. It was designed by Anne Boden, a banker with an IT background, and aims to use modern technology to make banking as convenient as possible, while enabling customers to benefit from the data they generate in their everyday lives.

It reached Unicorn status, a value of over $1bn, by 2021.

As a company that leads on tech, with a tech-heavy workforce, the banking-as-a-service model is a natural fit alongside the more traditional services of a bank.

“This is a significant step as we take the technology that has enabled Starling’s success in the UK to more financial institutions around the world,” said Raman Bhatia, CEO at Starling Bank. “In Engine, we have a world-class software as a service business that delivers the technology and the expertise that banks need to succeed in the digital age.”

According to research from Research and Markets, the global market for BaaS was valued at $29.5bn in 2024, and is projected to reach $74.8bn by 2030, growing 16.8% a year.

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