Stalling Starling revs up Engine in rebrand
Veteran of the UK fintech industry Starling has overhauled its brand with a fresh colour palette, a new slogan and even a new name.
The digital lender announced last week it would drop the word “Bank” from its banking arm’s name in a move analysts have described as a “significant” step in its evolution.
The firm has faced a bucket-load of challenges in recent years, from internal clashes to a hefty fine from the City watchdog.
But the new direction marks a “significant decision and it speaks of the ambition for Engine (Starling’s Software-as-a-Service provider)”, founder of Seapoints Insights John Cronin told CityAM.
Company boss Raman Bhatia said in May he was eying revenues of £100m in the “short to medium term” for Engine.
The divison helps other banks and businesses build their own digital banking services using Starling’s proven infrastructure.
Engine contributed a modest £8.7m to group income in 2024, but this marked a 284 per cent year-on-year increase.
Bhatia has also looked to the North American as a “huge opportunity” for the division.
Cronin said: “It is important to remember that Starling was borne out of the frustration that legacy banks’ deployment of outdated technology and the founding team was determined to build the bank’s own tech stack in-house.
“So, in a way, the orientation of emphasis towards Engine – which has been happening for a while – essentially reflects the bank going back to its old roots, seeking to leverage its core competence as it were.”
Starling takes a slice from the ‘gold standard’
Gautam Pillai, head of fintech research at Peel Hunt told CityAM: “The rebrand aligns with its strategy to scale Engine, which allows other institutions to build on its technology stack”.
The fintech analyst said the software-as-a-service platform was a “high-margin, scalable business model that could outpace traditional retail banking growth”.
“It also positions Starling to compete in the global infrastructure space, where demand for modern core banking technology is accelerating,” he added.
The strategic pivot could inject a fresh much-needed boost to the fintech, which has faced stalling momentum in the last year.
Cronin said: “Growth in Starling’s core banking business has been sluggish in recent years”.
The company grew its customer base by 10 per cent to 4.6m in the last year – but this was half of the growth achieved by the challenger the year prior.
Meanwhile, its peer Monzo swelled its customer base by 31 per cent and just this year Revolut surpassed Europe’s biggest lender HSBC after crossing the 50m threshold for customers.
Pillai said Starling ditching its “bank” branding followed suit with Revolut, which he branded “the gold standard of neobanks in the world”.
“This suggests the term “bank” is increasingly seen as limiting in a world where fintechs aspire to be global technology platforms rather than just financial institutions”.
Whilst the move has been viewed as a play to bolster growth in the Engine business, Starling said the rebrand of its banking arm had “nothing to do” with the company.
Will McSheehy, group head of corporate affairs for Starling, told CityAM: “We have refreshed Starling Bank’s brand, simplifying it to ‘Starling’ to capitalise on strong UK public awareness and to signal a new chapter in our growth.”
New marketing chief leads Starling in fresh era
The rebrand follows Starling hiring ex-Apple and Microsoft talent Michele Rousseau as its new chief marketing officer last November.
Rousseau has taken the helm leading the brand’s image with a fresh slogan to make the UK “good with money” after a bruising few years for the business.
In 2023, Starling’s valuation dropped by a staggering £1bn after asset manager Jupiter offloaded its stock for a price lower than the firm’s valuation.
Following the saga Anne Boden, Starling’s chief executive at the time, resigned after a speculated clash with investors. Both Boden and the company said her resignation was to avoid a potential conflict of interest stemming from her 4.9 per cent stake in the business.
The drama continued in the next 12 months where Starling was lambasted by the Financial Conduct Authority for “shockingly lax” financial crime controls.
The City regulator slapped the fintech with a £29m fine after finding it had opened more than 54,000 accounts for 49,000 “high-risk customers” between September 2021 and November 2022.
The fine was followed up by hefty losses on the Covid loan schemes – which allowed businesses to borrow up to a maximum of 25 per cent of their annual turnover for support during the pandemic.
Starling – an accredited lender of the scheme – was accused by a minister for using the scheme as a “cost-free marketing exercise” after failing to properly review borrowers before dishing out taxpayer-backed loans.
In its annual report this year, the bank posted a 25 per cent drop in profit after declaring it would turn down £28m of government guarantees on the Covid loans.
For the year to March, Starling booked £223m as the watchdog’s fine and lending woes took a chunk out of its balance sheet.
But the new reposition offers an insight into the firm’s future plans, where Starling is predicted to kick into first gear in its Engine division – a move that the business’ chief will be hoping steers it back to its once darling status.