Starling withdrew four years after initiating the application for a European banking license.

British digital challenger bank Starling told staff Monday that it had withdrawn its application for a European banking license from Ireland’s central bank after it spent four years on the process. The bank said in its memo to employees that it will focus instead on new opportunities in lending as well as selling its software-as-a-service product. (CNBC)

However, Starling has not given up its European ambitions entirely; it said it will expand in Europe through deals with other lenders rather than its own retail brand.

“Ultimately, we felt that an Irish subsidiary would not deliver the added value we are seeking,” CEO Anne Boden said in the memo. “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,” she added.

Starling is backed by Goldman Sachs (NYSE: GS) as an investor. Goldman is also active in the UK, offering savings accounts under its Marcus brand name.

Starling was last valued at £2.5 billion ($3 billion) in April – 2X what it was worth in a 2021 financing round.

Nevertheless, the decision to pull its banking license application is a setback to Starling’s international expansion plans. It comes at a time when fintechs’ public valuations have plunged; meanwhile Swedish buy now, pay later firm Klarna recently saw its valuation drop 85% to $6.7 billion from $45.6 billion last year.

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