LONDON (Reuters) - Startup British lender Starling Bank has received its banking licence, its chief executive said on Thursday, and will stick to its no-frills, technology-based strategy despite a darkening economic outlook and potential regulatory changes following Britain's vote to quit the EU.
Starling Bank Chief Executive Anne Boden said she still expects to benefit from coming EU rules designed to level the playing field for banks and payments companies, despite Britain leaving the bloc.
The European Union's Payment Services Directive 2 (PSD2) is scheduled to come into effect in September 2017 and extends the scope of 2007 legislation aimed at creating a level playing field for providers of payments services.
"PSD2 is going to be transformative for the industry and will likely be adopted by the UK whether we're in the EU or not," Boden told Reuters by phone on Thursday.
Boden, former chief operating officer of Allied Irish Banks (I:ALBK), founded Starling Bank in 2014 and said it will launch to customers in January 2017.
She said Starling will offer only one product, a current account that will use technology to make it easier for smartphone-using customers to manage their finances.
Facing the prospect of their first UK recession, Britain's small specialist lenders could struggle to cope with a downturn, especially in the small and medium-sized business sector that is their lifeblood.
The so-called challenger bank sector's shares have fallen an average 32 percent since the June 23 referendum result, compared with a 25 percent drop in the larger incumbent banks' shares.
Impacts of the vote result including slower loan growth and rising bad debts are "likely to be more pronounced in the Challenger Bank sector than the incumbents, given their size and exposure to economically sensitive sectors," analysts at Citigroup (N:C) said in a research note on Thursday.
Boden said Starling's pitch to help customers get a grip on their finances will resonate more in tougher economic times and that the bank is well suited to cope with a downturn.
"We have created this bank post [the 2008-9] crisis, we have built for a low interest rate environment with a very low cost base appropriate to these times," she said.