Starling Bank to cut jobs as restructuring weighs on profits outlook

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Starling Bank job cuts, profits

Highlights

Starling Bank will cut jobs by removing duplicate roles across banking and technology teams as restructuring aims to simplify operations and accelerate product delivery.
Group revenue decreased 6 per cent to £887mn and pre-tax profit declined 3 per cent to £217mn in the year to March, reflecting operational changes and investment in Engine.
Interest income dropped from £811mn to £759mn on Bank of England rate cuts, while Engine's international expansion continues with clients in Canada, Romania, New Zealand, and Australia.

Restructuring plan and operational changes

As first reported by Financial Times, the London-based bank tells staff this week that the reorganisation is set to remove what it describes as duplicate roles across banking and technology teams, according to two people familiar with the process. Management says the changes are intended to simplify internal processes and help the group bring new products to market faster through closer collaboration.

Starling says the restructuring is necessary because several major projects have ended and the bank is using more artificial intelligence in its operations. The bank says agility remains a central advantage over traditional lenders and that it is changing parts of its team structure to simplify how it operates, reduce duplication and support further product delivery.

The overhaul comes at a sensitive point for the lender, which Anne Boden founded in 2014 and which employs more than 4,000 people. In the year to March, group revenue falls 6 per cent from a year earlier to £887mn, while pre-tax profit declines 3 per cent to £217mn.

Growth strategy and fintech pressures

Starling says weaker performance is partly linked to investment in Engine, its digital banking software arm that it sees as a driver of international growth. The bank has 6.2mn customers, mostly in the UK, and it has struggled to expand its consumer banking model overseas after withdrawing from an effort to secure a European banking licence in 2022.

That challenge mirrors a broader issue across the UK fintech sector. Monzo has grown to 15mn users but remains concentrated in its home market, while falling interest rates also pressure neobanks that earn much of their income by placing customer deposits at the Bank of England rather than lending them out.

Starling's interest income drops to £759mn last year from £811mn as the Bank of England cuts base rates several times. At the same time, the group continues to build Engine, which has operated as a separate division since 2022 and is now used by banks in Canada, Romania, New Zealand and Australia.

Starling is targeting North America through Engine and has considered acquiring a U.S. bank as a way to showcase the software to mid-tier lenders and credit unions. Group chief executive Raman Bhatia says in December that expanding a software business internationally can be cheaper and easier than building a regulated consumer bank abroad, while the company also remains viewed as a possible initial public offering candidate.

Our earlier article on Atom Bank’s struggle to secure takeover offers highlighted how hard it can be for loan-focused UK digital banks to translate rapid balance-sheet growth into stronger valuations. We noted the trade-offs versus payments-led rivals, where scaling deposits and fee income is often easier, while expanding lending brings heavier regulatory, operational and pricing pressures that can weigh on performance.

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