tl;dr
Starling Bank has acquired British accounting software startup Ember to enhance its services for small and medium-sized enterprises (SMEs) by integrating Ember’s tax and bookkeeping tools with its banking products. The deal, valued under £10 million, aims to help Starling’s nearly 500,000 small busi...
Starling Bank has acquired the British accounting software startup Ember to bolster its service offerings for small and medium-sized enterprises (SMEs). The challenger bank aims to integrate Ember’s tax and bookkeeping tools with its core banking products, creating a comprehensive suite for business clients. Although the financial terms were undisclosed, sources suggest the deal was valued under £10 million (approximately $13.5 million). Declan Ferguson, Starling’s CFO, emphasized that combining invoicing, accounting, and tax software with banking services such as loans and credit lines is a natural progression for the bank.
The acquisition is timely given new tax regulations coming into effect next year from HM Revenue & Customs (HMRC). Around 780,000 sole traders and landlords will need to update HMRC quarterly rather than annually, as part of the government’s Making Tax Digital initiative. This change intensifies compliance pressure on small business owners. Starling’s integration of Ember’s technology aims to streamline tax filings for its nearly 500,000 small business customers, helping them navigate these new demands more easily.
Starling’s small-business portfolio has grown rapidly, supported by active lending under government pandemic schemes. Ember, founded in 2019, markets itself as a modern, mobile-friendly accounting platform that automates bookkeeping, expense tracking, and tax management. Previously partnered with banks like HSBC, Barclays, Revolut, and Lloyds, Ember will phase out these collaborations by 2026 and fully integrate into Starling’s ecosystem. Around 30 Ember employees may join Starling, including co-founders Daniel Hogan and Aaron Shaw, who will lead the integration efforts.
Despite regulatory challenges, including a £29 million fine last year related to past compliance failures and current restrictions preventing onboarding certain customers, Starling is pushing forward with expansion and innovation. The bank is reportedly exploring entry into the U.S. market by acquiring a nationally chartered bank and hiring senior bankers to facilitate this move. Declan Ferguson noted significant opportunity in establishing a regulated U.S. presence.
By acquiring Ember, Starling positions itself as more than a digital bank, evolving into a unified platform offering banking, accounting, and tax services tailored for small businesses. This strategic move signals its intention to compete head-to-head with traditional high street banks and fintech rivals like Tide and Revolut, which are also expanding their SME offerings. For small businesses facing tighter regulations, increased reporting, and rising costs, Starling’s integrated solution could offer much-needed simplicity and ease.