Revolut has obtained a banking license from the UK’s Prudential Regulation Authority. The new license will allow the fintech to widen its financial product offering but falls short of granting full banking privileges. However, the restricted license will allow Revolut to invest in the infrastructure necessary to support normal banking operations in anticipation of obtaining a full license.
Though it already has a European banking license obtained in Lithuania, Revolut has been waiting three years to be granted a UK version. “Today’s announcement is a significant step forward for [the firm] and for our customers,” said the firm’s UK chief executive, Francesca Carlesi. “It is a tremendous responsibility to be a bank in the UK and we will work relentlessly to offer products and services that improve the financial lives of everyone who uses Revolut.”
Revolut’s long wait for a banking license
Founded in 2015, Revolut is an app that allows users to centralise their bank accounts, plan monthly budgets and conduct discounted cross-border transactions, among other services. The firm claims to serve 45 million personal customers and 500,000 corporate customers in over 160 countries. While its new banking license comes with restrictions, it nonetheless advances its legal status from being effectively an intermediary between its customers and established banks to be able to provide products like current accounts, mortgages and branded loans.
Revolut originally applied for a UK banking license in 2021. While most applications are usually approved within a year, the firm’s pitch encountered multiple challenges related to its sheer size compared to most applicants and the state of its accounts. This included IT problems that delayed the verification of Revolut’s accounts for 2021 and 2022 – an issue that was eventually resolved by December of last year.
“The accounting systems and software that we had were originally designed for a one-dimensional product offering,” the firm’s then-CFO Mikko Salovaara told Sifted in March 2023. “We’ve [since] grown to be a very complex group operating in multiple markets, so we needed to make changes to meet our pace of growth.”
Fintech UK and Europe’s most valuable
Today’s decision will be a relief to Revolut’s investors and board, the latter of which appeared to be contemplating leaving the UK altogether if regulators did not rule on the granting of a license one way or the other. These concerns peaked in May 2023, when then-Secretary for the Department for Business and Trade, Kemi Badenoch, organised an emergency meeting with Revolut’s chief executive Nikolay Storonsky to prevent the fintech from moving to France or Spain.
The granting of a license also cements Revolut’s status as the UK and Europe’s most valuable fintech. Earlier this month the firm posted pretax profits for 2023 of £438m and has signalled its intention to issue an initial public offering. “Improving financial controls and making sure we bolster our team, being able to release these results within six months, is part of that journey,” Revolut’s CFO Victor Stinga told Reuters. “We are taking steps in making sure that our control environment trends toward the level you require as a public company.”
