UK fintech applies for EU banking license
(10 November 2017 – Europe) Financial technology firm, Revolut has announced plans to apply for a European banking license to broaden the portfolio of services it offers customers.
The London-based fintech startup has thus far raised US$86 million (A$112 million) in venture capital, and will join other fintechs in Europe seeking to win clients away from high-street banks with a digital-only focus, mobile apps, budgeting tools and low-fee or no-fee services.
Revolut said it will also build its own payment processing service, separately from its banking license, in an effort to improve reliability, reduce downtime and possibly cut costs.
Becoming a bank will allow Revolut to expand this product offering to include interest-bearing savings and consumer credit products. It will also mean that customer funds up to €100,000 (A$152,000) are guaranteed by the European Deposit Protection Scheme, which may encourage customers to keep more money on deposit with the company.
Revolut said it was applying for a banking license in Lithuania and expects to receive it in early 2018. If the license is granted, it will be able to offer banking services throughout Europe.
"Lithuania is an emerging fintech hub in Europe right now and one of our largest markets,” spokesman Chad West said.
“They have a fantastic regulatory environment that provides deep consultation during the banking application process and you can obtain a banking license much faster than in some other European markets.”
To help prepare for its license application, Revolut said it was appointing three new non-executive directors with banking experience: Peter Stevens, head of credit for SME Capital UK, Markus Krebsz, who is an expert on risk management for the United Nations Economic Commission for Europe, and Ramunas Stankevicius, a former chief executive officer of MP Pension Funds Baltic and a former board member of the Lithuanian Central Credit Union.
According to the firm, it currently has 950,000 users and has processed US$6 billion worth of transactions since its founding. Revolut is backed by London-based venture firms Index Ventures and Balderton Capital and has received debt from Silicon Valley-based TriplePoint Capital.