UK challenger Starling Bank has won a big Government contract and taken some big steps towards wholesale banking in mainland Europe. Having launched in April, Starling this week won a payment services deal with the Department for Work and Pensions to help verify benefit claimants for universal credit, through which it will manage a system for making initial small payments as a means of identity verification.

Starling is the  first UK challenger bank to be accepted into the EU’s payment system for large euro transactions, Target2, and is now able to handle big euro transactions for companies and lenders.

Commenting on moving into euro wholesale banking, founder and CEO Anne Boden told  the Telegraph: “It’s a step change for us. A lot of the other digital challengers are small and peripheral. What we’re doing is becoming a member of the big schemes using our expertise.”

Read more: Starling Bank takes aim at SMEs with new business account

Starling’s is still behind rival digital challenger Monzo – founded by Starling’s former chief technology officer Tom Blomfield, which is close to reach half a million signups.

“It’s good for an industry to have more than one player,” added Boden. “It’s now very do-able to start a digital challenger and consumers have embraced it.”

Henry is Junior Reporter at IBS Intelligence, follow him on Twitter or contact him at: