UK challenger bank Starling has decided not to pursue an Irish banking licence as it changes its plans for international expansion.
Despite pursuing an Irish banking licence for more than four years, the digital bank withdrew its application on Monday.
While the process had been interrupted in 2020 by the Covid-19 pandemic, it was reported to be at the final stage and close to completion when the plug was pulled.
In a memo to staff reported by Sky News, Starling founder Anne Boden said: "Sometimes changing course is the right option.
"My job as CEO is to constantly test our thinking against evolving circumstances and to make sure that we are delivering value and maximising potential for growth. Ultimately, we felt that an Irish subsidiary would not deliver the added value we are seeking," said Boden who was formerly a senior executive at Irish bank AIB.
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, said Boden, Starling will shift its focus to white labelling its banking-as-a-service software platform to other banks.
"We'll now be focusing on taking our software to banks around the globe through our Software as a Service subsidiary, Engine, and by expanding our lending across a range of asset classes, including through targeted M&A activity," said Boden.
While it is unclear what the move means for Starling's growth plans, it will be seen as a blow for Ireland's retail banking market given that it is about to see the departure of two of its five players - Ulster Bank and KBC Ireland.
The move also comes at a time when fintechs have seen their valuations under pressure. Data from CB Insights showed that in the last six months, listed fintechs have seen close to a half a trillion dollars wiped from their all-time highest valuations.
Privately-owned Starling actually saw its valuation double between 2021 and 2022. After a £130.5m internal fundraising round was completed in April, the bank was valued at £2.5 billion.