Starling Bank is to enter the German and French markets this year as it prepares for life after Brexit, with the digital lender’s boss moving to reassure customers that they will not face disruption.
Starling, which is challenging the industry giants for a share of the retail banking market, previously said that it would create a subsidiary in Ireland ahead of Britain’s departure from the European Union.
The bank already has a single euro payments area licence which allows it to carry out direct debit and card payments and transfers across the EU.
The bank, like other financial services firms, is looking to protect passporting rights that allows it conduct business across the EU, which will be lost if Britain leaves the bloc without a deal or transition period.
Chief executive Anne Boden said: “It’s no secret that Brexit is a major cause of uncertainty for everyone. We’re putting contingency plans in place to ensure that normal service to customers is not interrupted.
“Starling is targeting expansion in Ireland, where we will establish a subsidiary. Subsequently, we will target the French and German markets.
“We take great pride in being based in London, but are proud too of our international outlook and of having an employee base drawn from around the world.”
Ms Boden, an industry veteran who launched Starling in 2014, has also called on the big UK banks to scrap fees and charges for unarranged overdrafts, declined transactions and international transfers.
She said high street banks were updating their products and features akin to Starling – she stressed that imitation is the sincerest form of flattery – but were still “clinging to outmoded practices”.
Ms Boden maintained that Starling has a “different mindset” from the big banks.
“We don’t charge for declined transactions because the process of declining a transaction is automated and the incremental costs to us for each such transaction is very small.
“It’s the same for the big banks, but they still charge. Why? Because, until now, they have got away with it.
“If the fat cats of banking really want to copy us, let them copy our fees and charges too”.
Starling also does not charge any fees for customers using their debit card abroad and nor does it impose a monthly cap on free overseas card transactions or cash withdrawals.
Last month, the Financial Conduct Authority announced plans to overhaul how banks charge customers for overdrafts – including stopping firms charging higher prices for unarranged borrowing.
The City watchdog will also ban fixed fees for borrowing through an overdraft and make charges simpler to understand under its proposals.
Ms Boden said Starling already complied with the FCA’s proposals and that the lender’s overdraft rate was at 15% EAR (effective annual rate).
She added that she “wouldn’t be surprised if the old banks are already planning how they are going to replace banned charges with new ones”.
In a blog outlining the bank’s manifesto for the year ahead, Ms Boden said Starling would launch a new credit card and euro accounts for UK customers in 2019 along with other new products, and expand its lending activities.
The bank already offers a contactless debit card having launched its first mobile personal current account in May 2017.
Starling also expects to hit one million customers in 2019, putting it on a par with rival challenger start-up Monzo which has already pushed past that threshold, and that it will be profitable by 2020.
During 2018 customer numbers grew from 50,000 to more than 400,000.
The company operates solely from its mobile app and does not have any bricks and mortar branches, although it does have an agreement with the Post Office for customers who want to make or withdraw cash deposits.
Starling was recently named as one of 11 challenger banks that was approved for the £350 million banking competition and remedies fund that is aimed to take business customers away from the Royal Bank of Scotland.
The fund is a condition of RBS’s £45 billion bailout a decade ago.
The chosen banks will be able to make offers to RBS’s business customers from the end of February.