London- British digital bank Starling has raised around £50 million in funding from Goldman Sachs. Moreover, the fresh case comes to almost the top £272 million investment round Starling that made announced that valued the online lender at £1.1 billion. Notably, the deal with Goldman is still subjected to regulatory approval.
Anne Boden, CEO and founder of Starling mentioned, “Securing the support of another global financial heavyweight demonstrates the strength of demand from investors and represents yet another vote of confidence in Starling.”
Starling is one of the U.K.’s biggest neobanks. However, the term is used for describing the wave of fintech start-ups which is founded in the last decade with the prime aim of taking on the incumbent banks with branchless banking. This is more than £6 billion in deposits. This is more than £1 which is over a year ago.
Starling is now looking for differentiating from the rivals like Revolut and Monzo by focusing on small business banking. Out of 2 million total users almost 350,000are the business clients. Startling mentioned that it now holds around a 6% share of Britain’s SME banking market.
On the other hand, Starling mentioned separately that it from its competitors that have managed to turn its profit. Neobanks now has been loss-making for years. It is now under heightened pressure for proving their business can make money.
However, Goldman’s investment in the company comes as soon as the reports that JPMorgan and Barclays had shown their interest in buying Starling but Starling denied this. Now, the big firms are looking out to do partnerships with the tech firms.
In 2018, Goldman has launched its own competing digital bank which is called Marcus in the U.K. Currently, the bank is temporarily paused applications that are easy-access saving account in Britain in the last year due to a surge in the deposits at the time of the covid lockdown. Notably, it’s since the reopened applications to U.K. savers.
Moreover, Goldman isn’t the only U.S banking giant by taking it on the U.K. market. JPMorgan is now launching a digital banking brand of its own for British consumers.
Goldman Sachs’ Managing Director James Hayward mentioned, “Starling is one of the leading and most innovative digital banks in the U.K., with an ambitious technology-first leadership team and addressing a deep market opportunity. We are delighted to be supporting their growth with this investment and believe the company has sustainable long-term earnings potential.”
Starling made plans for using the fresh cash for expanding for its services in Europe and potentially by making a merger or acquisition. In the last year, the company has also restarted spoke for securing a banking license in Ireland after the initial by putting them on hold, this is due to the covid pandemic.