Starling ditching EU banking license is a red flag for everyone else 🚩; Declining FinTech funding & $0.5T wiped out signal a harsher climate for startups 😬; PayPal > Banks in Super App wars 📲

Good Morning FinTech, 20 July

Good morning Everyone,

And happy Wednesday! Today’s issue is especially interesting as we are looking at the three prevalent and important trends happening in FinTech right now. From Starling Bank ditching its EU banking license application (which is a red flag for others) and declining FinTech funding globally (which signals a more difficult climate for startups) to PayPal being favored vs. Banks in the Super App wars, it’s something you just can’t ignore. So without further ado, let’s just straight into the good stuff:

Starling ditching EU banking license application is a red flag for everyone else 🚩

The decision 😳 UK-based digital banking FinTech Starling, which is backed by the banking giant Goldman Sachs with a GBP 50M investment, has withdrawn its application to obtain a European banking license from the Irish Central Bank.

More on this 👉 Starling’s application had reportedly faced problems in the past, with the digital lender temporarily pushing back talks with regulators in 2020, amid the COVID-19 pandemic. We can remember that the bank first initiated the process to become regulated in the EU in 2018.

The pivot 👀 Starling is one of the largest online banks in the UK, counting over 3 million clients, of which half a million businesses. The privately-owned firm was valued at GBP 2.5 billion in April 2022.

Ireland was supposed to serve as a base for Starling's European expansion plans and the bank had already assembled a small team to work on the ground in Ireland ahead of the launch. Instead, Starling will shift its focus to white labeling its banking-as-a-service software platform to other banks via its BaaS arm Starling Engine.

What does this mean? 🤔 Ultimately, it’s a red flag for all other FinTechs that aim to become banks. Here’s the takeaway: