Will Revolut Attain a UK Banking Licence?
(14 June 2023 – United Kingdom) While Revolut is actively promoting its milestone 30 million retail customer mark, will the group be denied a banking license in the United Kingdom (UK)?
Britain’s most valuable fintech has criticised regulatory hurdles that it believes could drive the group to shift its operations offshore. Revolut is waiting for UK approval of its banking licence more than two years after it lodged its application.
A banking licence would allow Revolut to hold its own customers’ deposits and use them to offer its own-branded loans to customers. This would offer a new stream of income, and would open the door to banking licences in other countries including Australia and the US. The crypto-friendly fintech has launched international payments-focused business accounts for clients in Australia already as it actively seeks to secure a banking license down under.
“A bank licence is still very much part of our plans. To be held to that regulatory standard would give our consumers confidence for the long haul, and would enable products that are in demand from our customers. We’re working our way through that, and it’s a key part of our plans overall” commented Revolut Australia CEO Matt Baxby.
Kapronasia reports that although Revolut has a banking license in Lithuania that notionally allows the group to deliver banking products and services in Britain, the UK license is of significantly greater importance.
What is holding up UK regulators from approving Revolut’s application? Key impediments include the enormous volume of paperwork to process, very public accounting issues on the back of delayed 2021 financial account reporting and the departure of the group’s CFO Mikko Salovaara.
“Chances are, that unless some clear red flags show up in the company’s books, that it will eventually be approved for the UK banking license. UK regulators, cognizant that their country has lost some attractiveness to the financial sector post-Brexit, would be unlikely to deny a banking license to the country’s most prominent fintech without a very good reason” Kapronasia stated.
“That said, the breakneck pace of Revolut’s expansion cannot continue, especially if it plans to offer investors an eventual exit via an IPO. India, Mexico, the United States, the European Union, the UK, Australia, Japan, Singapore. Revolut wants to be a big player in all of these countries and more.”