Revolut Secures UK Banking License After Years of Waiting

Revolut, a British fintech, already had a European banking license. However, until now, it did not hold one in its primary market, the UK. Now it does under a “restricted authorization” which will be valid for a maximum of one year, allowing Revolut time to prepare its services for deployment.

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Revolut Announces UK Banking Licence

Revolut, the neobank, announced on July 25 that it had obtained a banking license in the United Kingdom, where its headquarters are located, “with restrictions.”

The authorization was granted by the Prudential Regulation Authority (PRA), the UK’s banking regulator, five years after obtaining a European license. With this major step, Revolut aims to become “the bank of choice for UK customers,” said Nikolay Storonsky, CEO and co-founder of the fintech.

An Interim Step to Address Regulatory Concerns

These restrictions aim to ensure that the company is ready to deploy its services when the time comes. “Revolut is now entering a ‘mobilization’ phase, a common step for many banks in the UK,” the fintech explained. This intermediate stage can last up to twelve months, allowing “new banks to complete the development of their banking operations before launching in the market.”

During this period, the neobank must also address the concerns of regulatory authorities. According to the PRA, institutions can receive investments, hire staff, and strengthen their IT capabilities, but the amount of deposits they can accept remains limited. At the end of this phase, Revolut will be able to provide loans, savings products, and overdrafts to its 9 million UK customers.

45 Million Users Worldwide

Revolut has experienced exponential growth in its customer base, with 45 million users worldwide (3.5 million in December 2018, at the time of obtaining the European banking license). France is its second-largest market after the UK, with nearly 3 million customers. According to its annual report published at the beginning of the month, the fintech nearly doubled its revenue in 2023, reaching £1.8 billion (€2.1 billion), and achieved a net profit of £344 million (€407 million). It could reach a valuation of $45 billion (€41.4 billion) in a future stock sale.

However, Revolut made headlines due to disastrous delays in publishing its annual accounts. The 2022 accounts were made public at the end of 2023, and the 2021 accounts in March 2023. The company claims to have made progress in this area, even though the 2023 accounts were published in early July.

Revolut Facing Increased Disputes with Customers

Additionally, according to the Financial Ombudsman Service (FOS), the UK mediator for financial institutions and their customers, Revolut has been negligent in refunding customers who were victims of fraud. In the first half of the year, the organization recorded over 2,200 complaints from its users, a 35% increase. By comparison, complaints rose by 1% at HSBC and decreased by 10% at Barclays.

The European Central Bank (ECB) is also reportedly pressuring Revolut, as Bloomberg reports, placing the fintech under direct supervision since the beginning of the year. It has particularly asked the fintech to improve its controls and governance concerning financial crime. This oversight is partly motivated by Revolut’s rapid growth in the banking sector in Lithuania, from where it can operate in the Eurozone.

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(Featured image by Edi Kurniawan via Unsplash)

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First published in Usine Digital. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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