Goldman-backed Starling announces no plans to pursue an EU bank license; expansion will focus on software.

Digital bank Starling will not reapply for a European Union banking license and will instead focus on international expansion through its software business, according to the incoming CEO. This marks a shift in strategy compared to some of its competitors.

Starling, one of the U.K.’s leading “neobanks” — digital-only banks with no physical branches — was founded in 2014. It has amassed 4 million customers and was last valued at £2.5 billion ($3.2 billion).

The digital bank, backed by Goldman Sachs, has traditionally offered banking services such as current accounts and lending, primarily to U.K. customers. Starling had aimed to expand internationally by applying for an Irish banking license, which would have granted access to the European Union market, but withdrew the application in 2022.

In his first public remarks since becoming CEO in March, Raman Bhatia outlined the company’s international expansion plans on Wednesday. Bhatia stated that the company has no intention of reapplying for the EU banking license. Instead, Starling’s international growth will be driven by Engine, a software platform the bank sells to other companies to help them establish their own digital banks.

“I am very bullish about this approach around internationalization of what is the best of Starling, the proprietary tech versus market by market, idiosyncratic regulatory regime, capital requirements, and building trust and brand extension, which is unproven for any plan,” Bhatia said during a fireside chat at the Money 2020 conference moderated by CNBC. Bhatia highlighted significant opportunities in regions such as Thailand and the Middle East.

Engine is a distinctive model among neobanks, which typically focus on consumer-oriented apps and services. Starling believes it can successfully market its technology to other banks. Salt Bank in Romania and AMP in Australia are Starling’s first Engine customers. Bhatia expressed a desire to “double down” on the Engine strategy and capture a larger share of the enterprise software market.