Welcome.
I'm here at Money 2020 Europe in Amsterdam, and I had the pleasure of being joined by Declan Ferguson, Executive Director and Group CFO of Starling.
Declan, thank you so much for joining.
Pleasure to be here.
So, you have had just passed a milestone of 5 years consecutive year of profitability.
Um, what does sustained profitability unlock for the group strategically and how does that influence conversations with the board and your partners?
Yeah, thanks Anastasia.
So as you say, the 5th year of profitability, um, that is a big milestone for the group.
Um, we were actually the first neobank to break even in, uh, Europe, actually a long time ago when it was much less fashionable to be, you know, profitable as a fintech.
Um, the business now has over 500 million of surplus capital and is generating, well, in our most recent results, 226 million of pre-tax profits.
You should see us print a number closer to 300 next year, so lots and lots of capital in the group.
Um, we're doing lots with it as well, right?
So we are investing and expanding our UK business.
We're onboarding almost 300% the volume of small business customers that we were this time last year.
We're also investing in our software as a service subsidiary engine.
Where we now have 70 million of contracted revenue, and then we're also in the very early stages of exploring, um, a second bank license somewhere outside of the UK to take our regulated proposition um to other customers around the world.
It's, it's so exciting to see and it's clearly one of the biggest success stories in the UK's FinTech um landscape.
Um, talk to me a little bit about Engine.
Uh, Engine by Starling doubled its client base and grew revenue 25% in the last year.
Um, what is Engin today and what does that look like when it's reached the massive scale that you're targeting?
So we have 4 clients today in Engin, 70 million have contracted recurring revenue, as I said.
In October last year we announced a landmark client for the business, so a tier one bank, Scotiabank, signed us up, uh, to power their Tangerine proposition in Canada, where we'll be onboarding millions of customers onto the engine platform.
We're midway through that implementation, and that will be a huge landmark kind of proof point of engine and the technology we've built in the UK that has made our UK business so successful, and it's a really.
Unique story because customers are coming to us because they can observe the case study in the UK, the case study that has worked for 10 years, dual regulated by the PRA and the FCA with the highest levels of operational resilience.
So banks look at that and that's what they want to buy, and we have been very successful in selling that.
And E engine, the aspiration is for it to go global and for us to take that technology and power other neobank propositions in every part of the world.
And just for the more global audience and our, our audience in the states, just tell me quickly about what Engine is um within your group.
Engine is the entire core banking platform, the technology stack that we've built and iterated over the last 10 years of building, starting here in the UK, um, and we are selling that entire tech platform to other banks around the world, so it's the entire proprietary.
Platform from the ledger all the way through to customer service all the way through to APIs and apps on top.
So it's the bank in a box if you like.
It's fantastic.
So such an innovative progression in the business strategy.
And you mentioned there that you're looking at new markets.
You've been UK headquartered for such a while.
What does international expansion look like?
So we think there's some really interesting jurisdictions like the US where retail is very overserved um on two ends of the spectrum, right?
So you've got players like Chime who are doing a great job of the kind of underbanked, underserved segments.
And you've got Chase doing a great job of kind of the the mass affluent populations as you might call them.
But there's no one doing small business banking, and that's what we've been very successful in cracking in the UK is transactional.
Banking for kind of microbusinesses, sole traders, single director limited companies who generally get a pretty bad deal of the incumbents, both in terms of cost and service.
We see that kind of uh parallel in the US and the US is simply a huge market, right?
You know, the UK 5.7, 5.8 million SMEs, there's 37 million of them in the US.
Yeah.
And so if we can get a foothold there, um, and use our engine technology to power that proposition as well, we think that would, that, that would have traction.
Talk a little bit more about the US.
I mean, the landscape of FinTech in the US is fascinating, given that they've been such, you know, drivers of tech success, digital success.
Um, but the fintech landscape in particular, it's very different from Europe and certainly different from the UK.
Can you speak a little bit to, to why and how Stalin, I mean, you know, as you said, you've been targeting the the SMEs, and, but what that means to Stalin.
Yeah, I think, as I said, it, it, it is different.
There's lots of people now going for it though as well, so there's lots of our peers that kind of grew up and developed in Europe and and Latin America with new bank making an entry as well.
So I think it'll actually become more competitive for FinTechs there.
We want to find and lean into the niche where we've been successful before, and I think the uniqueness of what we build in the group is we. proven that the technology stack can go international, so we've launched it in 4 businesses now.
We're launching it in North America already in Canada through Scotiabank.
So we have, we've already proven that the technology can be localized, it can be exported, and we now want to be a customer of our own, of our own technology in effect, and use that to power a second banking list.
And looking forward into the future, what are the biggest milestones that you're focused on, um, for Sterling?
So look, Starling, I think at some point will become a listed business, that is, um, part of the journey.
Um, it is not the kind of end goal of the business, but, and obviously as I referenced earlier on, we have a lot of capital, so there's no kind of need for primary capital or growth capital.
That of course could change as we develop the business and we find new opportunities.
But I think at some point this business absolutely deserves a home on a listed market.
When, where and how we haven't decided yet, but that will be part of the journey at some point.
Well, we really look forward to hearing more about that and uh thank you for joining me and enjoy the rest of the conference.
Thank you so much, Anastasia.
