Marketplace banking — the idea that your bank will provide you with access to various third-party money-related apps and services within its own app — has long been championed by fintech startups, whilst upcoming Open Banking/PSD2 legislation in the U.K. and EU, respectively, will make third-party app integration an inevitable reality. That’s seeing a number of challenger banks skating to where the puck is going, including London-based Starling Bank, which today is launching the Starling Marketplace.
Billed by the digital-only challenger bank as a new concept in banking, the Starling Marketplace puts products from other fintech providers (and in the future “lifestyle products,” because nearly every business is going to be tempted to jump onboard the Open Banking train) within “an easily browsed ecosystem” accessible within the Starling app.
Partnering companies integrate with Starling Bank via the challenger bank’s Open Banking-compliant APIs, although, as I’ll explain below, are integrating more deeply than simply making use of those APIs, which any third-party developer, once vetted, can potentially do.
The first fintech company to be added to the Starling Marketplace, and an example of the deepest kind of integration we are likely to see, is Flux, the itemised receipt and rewards startup based in London. Founded by Tom Reay, Matty Cusden-Ross, and Veronique Barbosa, all former early employees at Revolut, the company has built a software platform that bridges the gap between the itemised receipt data captured by a merchant’s point-of-sale (POS) system and what little information typically shows up on your bank statement or mobile banking app.
The Starling integration sees Flux send real-time itemised receipts to the Starling app when a customer pays with their Starling card at any of Flux’s retail partners, which so far includes all 111 EAT stores in the U.K. and Bel-Air. As early as next week, Flux will also enable Starling users to get automated loyalty points with cash-back for Flux-supported purchases, without the need for paper coupons. Starling Bank users will need to activate Flux from the Marketplace section of the Starling app to instantly link their card.
“This is our first native integration, where you can switch on Flux from in app, and our first full bank partnership,” Flux’s Cusden-Ross tells TechCrunch. “Starling customers should switch on Flux because we’ll help them finally rid their wallets of paper receipts and paper loyalty cards without asking them to download or setup anything extra. We also think Starling customers are particularly interested in tracking their financial life in real-time and would agree it’s insane that today the only way to keep track of exactly what we buy is via little bits of paper”.
The framing of Starling’s Flux integration as a “first full bank partnership” refers to the fact that Flux originally launched with rival challenger bank Monzo, but only in a very limited pilot that restricts the number of users that can be activated as Monzo readies its own API and marketplace banking offer.
“The users we do have have been really positive on the experience and have been driving our word of mouth sign-ups to sky-rocket, they’re all patiently on a waitlist and we’re working with Monzo to understand timelines for next steps. The on-boarding experience for Monzo is also a pilot version where the user is currently on-boarding through our website and not natively in Monzo,” explains Cusden-Ross.
In a call with Megan Caywood, Chief Platform Officer at Starling Bank, she explained that the Flux partnership, when/if Starling users choose to activate the functionality, enables a greater detail of spending data to be displayed within the Starling app for purchases made at merchants that support Flux. By default, Starling users can see the retailer’s name, amount spent, date and location (complete with a map), but Flux goes further by displaying the item bought, VAT and any available loyalty stamps.
Zooming out a bit further, Caywood says that Starling third-party integrations fall into three categories. Flux and the bank’s upcoming partnership with TransferWise are examples of the deepest type of Starling app integration but isn’t typical.
Instead, whilst they’ll be discoverable and can be authorised via something akin to an app store within the Starling app, most Marketplace apps will only send back and display a limited amount of data in the form of a dashboard or ‘widget’ (my words, not Caywood’s). If I understand correctly, in certain instances this trade-off reduces the regulatory burden on Starling and, crucially, is a good compromise to stop the Starling app from becoming bloated.
A third category of integration are apps that simply make use of Starling’s API. Right now, these include Tail, the local offers startup I recently covered, or roundups app Moneybox, which use the API to authenticate, access and build on top of various levels of your Starling bank account data and functionality, with your permission, of course.
“TransferWise will be one end of the spectrum, being deeply integrated, whereas Moneybox is at the other end of the spectrum where they just integrate our API but don’t appear in Starling,” Caywood tells me. “The Marketplace portion of the app is a hybrid – where an app has integrated our API and we have integrated theirs, so users can find them and connect to them via the Starling app, and have a dashboard in Starling that gives an overview”.
Meanwhile, I’m hearing that Flux has closed $1.5 million in seed funding led by PROfounders. I also understand that Anthemis, which has invested in other fintech companies such as Currency Cloud and Azimo, participated in the round.