What you need to know about Starling’s BAAS engine

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Starling Bank is one of the best known challenger banks in the UK. Since launching the beta version of its digital banking app in 2017, it has built a reputation for bringing innovative solutions to market and delivering digital banking services to millions of consumers and businesses.

As one of the first fully digital banks to launch in the UK, Starling had to build its entire tech stack from scratch, a process that took three years to launch the first Starling account, and which has continued ever since.

Starling is considered particularly strong in the areas of cloud banking and open banking. In fact, the company’s focus on engineering and technology development led Starling founder and CEO Anne Boden to state that the neobank “will be an international global technology company, which happens to be a bank “.

With all of this engineering and technical acumen, Starling has forged various partnerships over the years that allow third parties to leverage its technology. Away from Starling’s personal and corporate account business, she cultivated a growing parallel hustle selling her technology and knowledge to companies like Raisin Bank and the UK’s Department for Work and Pensions.

The alternative revenue stream generated by Starling’s Banking-as-a-Service (BaaS) business grew large enough that in February the challenger bank registered a dedicated BaaS subsidiary, known as Engine by Starling.

But what exactly is Engine and who is it for? PYMNTS looks at five key things to know about Engine by Starling.

1. It relies on Starling’s own technology

Companies that deploy Engine will be able to use the same technology used by Starling Bank itself.

From digital onboarding and identity verification to card issuance and management, Engine is designed as a “bank in a box” that will help financial service providers quickly build tools and applications. Indeed, Starling has already spent years developing the features and has now bundled them into a ready-to-use toolkit for a range of banking and payment processing applications.

2. It’s designed to be mobile-first

One of the issues Starling is looking to address with Engine is that many financial institutions simply don’t have the expertise to build their own in-house mobile apps.

There is currently only a limited and highly sought after pool of developers with experience in the complex field of mobile banking, which overall is still a relatively new phenomenon. After all, it wasn’t until 2011 that the UK got its first app-store banking apps.

Engine is designed for rapid deployment of mobile banking functionality while being flexible enough to be used for a range of applications. For example, it’s completely cloud-agnostic, which means developers using Engine can always choose their preferred cloud provider.

In fact, in the contemporary mobile development landscape, cloud technology is increasingly critical. Google Cloud, Amazon Web Services and Microsoft Azure, as well as a number of smaller cloud technology players, are all deployed in often complex configurations, making interoperability between systems and standards more important than ever.

3. It’s completely modular

With Engine, Starling has pursued a modular approach that makes the platform suitable for developers looking to build a product from scratch or those looking to add new functionality to an existing application.

Modularity gives Engine users greater flexibility to pick and choose components without having to run their entire system on the Engine platform.

An open, cloud-based API framework lends itself to customization and interoperability between modules that deploy divergent standards, languages, and database types.

The modular approach is also valuable when migrating an existing product to the Engine platform. Rather than having to freeze the service while the entire application architecture is disassembled and reassembled in the Engine environment, developers can transfer services unit by unit without interrupting the operation of the entire application. .

4. Starling sees the United States as a key market for Engine

At the recent Money2020 conference in Amsterdam, Boden said that although Starling built the proof of concept for Engine in the UK, it was more likely to sell its technology to players in the US market, where Starling is not. here.

She said the bank doesn’t want local competitors to “access the Starling magic”, suggesting the company would rather provide its BaaS solution to customers operating in other markets.

In a recent webinar, Sam Everington, CEO of Engine, said Starling’s strategic focus on BaaS is tied to the fact that growing internationally as a bank requires getting the right licenses, which can be costly. .

“We don’t plan to go down Revolut’s path of seeking licenses in 50 different countries,” he said. “It’s very expensive, it’s very capital intensive, it takes time, and you have to build that brand, that trust and that recognition.”

5. Withdrawal of EU banking license emphasizes engine expansion

This week, PYMNTS announced that Starling was withdrawing its license application from the Irish Central Bank and would instead focus on promoting Engine by Starling, as well as new lending areas.

Read more: UK FinTech Starling scuppers EU banking license

The company said it hasn’t given up on expanding across Europe, but is now considering that route through software deals with other lenders. “Ultimately, we felt that an Irish subsidiary would not provide the added value we were looking for,” Boden said in a memo to employees.

“We will now focus on delivering our software to banks around the world through our Software as a Service subsidiary, Engine, and expanding our lending to a range of asset classes, including through targeted mergers and acquisitions,” she added.

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