Revolut Secures UK Banking Licence After Three-Year Regulatory Hurdle, Eyes Expansion

Revolut, one of Europe’s leading fintech firms, has secured a UK banking licence after a protracted three-year regulatory battle. The UK-based company announced that the Prudential Regulation Authority has granted it the necessary permit.

Nik Storonsky, the founder and CEO of Revolut, expressed his pride in reaching this critical milestone for the company. “We are incredibly proud to reach this important milestone in the journey of the company and we will ensure we deliver on making Revolut the bank of choice for UK customers,” Storonsky stated. Similarly, Francesca Carlesi, head of Revolut’s UK division, described the acquisition of the licence as “a significant step forward for Revolut and for our customers.”

Revolut already holds a banking licence in Lithuania, enabling it to provide banking services across the European Union. However, the UK banking licence is particularly significant as it allows Revolut to offer banking services in its home market, where approximately nine million of its 45 million users reside.

The fintech firm initially applied for the UK licence in 2021, with the expectation that the approval process would take about 12 months. However, the application faced delays due to various regulatory concerns, including issues related to its ownership structure and the late filing of its accounts. These concerns have since been largely addressed.

Before obtaining the licence, Revolut's operations in the UK were restricted to functioning as an e-money firm, essentially acting as an intermediary between consumers and licensed banks. The new licence will enable Revolut to hold customer deposits, paving the way for the company to offer more lucrative financial products, such as mortgages.

This development comes at a propitious time for Revolut. Founded in 2015 by Nik Storonsky, the company has experienced rapid growth and is now one of Europe’s most valuable start-ups. In a 2021 fundraising round, the firm was valued at $33 billion, and it is currently in discussions to sell approximately $500 million worth of shares in a deal that could value it at around $40 billion.

Revolut is hopeful that the UK regulatory approval will enhance its prospects of obtaining banking licences in other major markets, such as the United States. In a statement, the company announced it had entered a “mobilisation” phase in its UK operations. This phase will enable Revolut to finalize its UK banking infrastructure before launching its banking products. During mobilisation, Revolut will be limited to holding a total of £50,000 in customer deposits as it develops the systems necessary to operate under a full licence. Typically, this phase takes about a year to complete for new banks.

By fLEXI tEAM