Revolut has secured a UK banking licence after a protracted application process, positioning itself to offer enhanced financial services.
- Revolut’s licence application process took three years due to various hurdles.
- With the new licence, Revolut plans to offer loans, overdrafts, and other lending products.
- Revolut’s services will now be protected by the UK’s Financial Services Compensation Scheme (FSCS).
- The company has resolved previous concerns around its accounting practices and ownership structure.
- Revolut is now in a ‘mobilisation’ period to implement the necessary systems for full banking operations.
Revolut’s journey to obtaining a UK banking licence has spanned three years, significantly longer than usual for such applications. The delays were primarily due to several challenges encountered during the process. With the successful acquisition of this licence, the app-based financial company can now diversify its offerings, including loans, overdrafts, and other lending products, to its nine million UK customers.
The newly acquired licence also means that Revolut’s banking services will be covered by the Financial Services Compensation Scheme (FSCS), which protects customer deposits up to £85,000. Nik Storonsky, Revolut’s co-founder and CEO, hailed this development as an ‘important milestone’ for the company.
Revolut, valued at $33 billion during its last fundraising round in 2021, has rapidly grown to become a pivotal entity in Britain’s fintech sector. Founded nine years ago by Storonsky and Vlad Yatsenko, the company initially focused on money transfer and foreign exchange services. It now serves over 45 million retail customers across 38 countries, offering a wide range of services from cryptocurrency trading to insurance.
Despite holding a European banking licence from the Bank of Lithuania, which allows it to operate across the EU, Revolut’s expansion in its home market has been hindered by the absence of a UK banking licence. The company had been operating under an e-money licence, requiring third-party banks to hold customer funds and preventing it from offering lending services in the UK.
Revolut’s licence application faced significant scrutiny, especially regarding its rapid growth. A major challenge emerged when its auditor, BDO, raised concerns over nearly £477 million of the company’s 2021 revenues. This issue led to a qualified opinion on the accounts but was resolved in the 2022 report. Additionally, Revolut’s complex ownership structure was simplified to facilitate the approval process.
Now granted ‘authorisation with restrictions,’ Revolut enters a ‘mobilisation’ period to develop the necessary infrastructure to function fully as a bank. This phase, typically lasting about a year, allows the company to hold up to £50,000 in total customer deposits and continue operating under e-money regulations in the UK.
The acquisition of a UK banking licence marks a transformative step forward for Revolut, enhancing its capacity to offer comprehensive financial services.
