Starling Bank chief executive plans exit as UK digital lender faces slower growth

Highlights

CEO Raman Bhatia plans to step down after less than a year, prompting Starling Bank's board to accelerate succession planning.
Starling Bank's valuation dropped from a planned £4 billion to £1.7 billion as Anne Boden fully exited her stake last month.
Revenue fell 6% to £887 million and pre-tax profit declined 3% to £217 million for the year to March, pressured by lower interest income and ongoing FCA restrictions.

Succession planning gains urgency

As first reported by the Financial Times, Bhatia has privately told Starling's board that he no longer wants to run the fintech, prompting directors to intensify succession planning, according to three people familiar with the matter.

Bhatia became chief executive in March 2024, taking over after founder Anne Boden stepped down following clashes with investors over the bank's valuation trajectory. Boden founded Starling in 2014 as one of the UK's digital-only challenger banks, but the lender has struggled to match the valuation growth achieved by rivals including Monzo and Revolut.

Last month, Boden sold the last of her stake at a valuation of £1.7 billion. That compares with plans for a secondary share sale at a £4 billion valuation last year.

Profit pressure and regulatory constraints

Starling's recent financial performance underscores the challenge facing the bank. Revenue fell 6% to £887 million in the year to March, while pre-tax profit dropped 3% to £217 million as lower Bank of England base rates weighed on interest income.

The bank is also still dealing with the impact of Financial Conduct Authority restrictions imposed in 2021 over weaknesses in financial-crime controls. Those measures stopped Starling from opening new accounts for high-risk customers, and three years later the FCA fined the bank £29 million, saying it had operated with "shockingly lax" controls.

Bhatia said at the company's full-year results in May that Starling is in the process of exiting those restrictions. The lender is also relying on Engine, its software platform developed in 2022, as a key growth driver; the business is already used by banks in Australia, New Zealand, Romania and Canada. Starling Bank declined to comment.

In our earlier article on the Bank of England’s push for “bare metal” recovery planning, we explained how UK regulators are urging banks to prepare for more severe technology failures as AI amplifies the scale and complexity of cyber attacks. We noted that supervisors want lenders to develop independent fallback systems for critical services and adopt end-to-end recovery thinking, rather than relying on prevention alone.

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