Revolut, the global fintech giant, has achieved a major milestone by securing a UK banking licence, marking a significant step in its ambitious expansion plans. This licence comes after a protracted three-year process with the Prudential Regulation Authority (PRA). Although subject to restrictions, the authorisation sets the stage for Revolut to transition from an e-money institution to a fully operational bank in the UK.
My thoughts on @RevolutApp finally getting its UK banking licence.
It's UK Banking license will allow it to offer overdrafts, loans, and savings products to its more than 9m UK consumers.
🧠 This is a huge moment for Revolut and UK Fintech. Revolut has talked a big game on the…
Revolut’s journey into the banking sector will proceed through a “mobilisation” period, a regulatory stage commonly referred to as ‘Authorisation with Restrictions’. Revolut will finalise its banking operations and processes during this phase before fully launching its banking services to the UK market.
Nik Storonsky, Founder and CEO of Revolut, expressed his pride in this achievement, stating, “We are incredibly proud to reach this important milestone in the company’s journey, and we will ensure we deliver on making Revolut the bank of choice for UK customers.”
Francesca Carlesi, Revolut’sUK CEO, also highlighted the significance of this development, saying, “Today’s announcement is a significant step forward for Revolut and for our customers. It is a tremendous responsibility to be a bank in the UK. We will work relentlessly to offer products and services that improve the financial lives of everyone who uses Revolut.”
Implications for Customers
Revolut’s UK customers will not experience any immediate changes during the mobilisation period. Existing e-money accounts will continue functioning as usual, ensuring customers can access their funds and use Revolut’s services without interruption. Once the setup is complete, Revolut will guide customers through the transition from e-money accounts to UK bank accounts.
Revolut’s blog post reassured users, “Until we complete our work building the best possible banking experience for our customers, we will continue operating as usual. Customers can keep using their existing Revolut account as always, with no changes to our products or services.”
Financial Performance and Future Plans
The approval of the UK banking licence comes on the heels of a remarkable year for Revolut. 2023 the company posted a record pre-tax profit of £438 million, a significant turnaround from the £25 million loss in the previous year. Revenues nearly doubled to £1.8 billion, and the company expanded its customer base by 12 million, bringing the total to over 45 million globally.
Revolut has also been active in launching new products, including eSIMs, RevPoints, and a Robo-Advisor. Revolut plans to introduce additional offerings with the UK banking licence, particularly in the lending sector, which was previously restricted under its e-money status.
Overcoming Regulatory Hurdles
Revolut’s path to securing the UK banking licence was fraught with challenges. The application, initiated in early 2021, faced delays and scrutiny, including concerns from auditors about the accuracy of revenue figures in the 2021 accounts. The Bank of England also required Revolut to simplify its share structure, which led to a dispute with investor SoftBank.
Despite these hurdles, the PRA’s approval is seen as a vote of confidence in Revolut’s potential. The licence enables Revolut to broaden its product range in the UK and strengthens its position for future regulatory approvals in other markets, such as the US.
Conclusion
Revolut’s acquisition of a UK banking licence marks a pivotal moment in the fintech’s evolution. As the company enters the mobilisation period, it reassures customers of continued service stability while preparing to offer a broader array of banking products. This development underscores Revolut’s commitment to enhancing its financial services and expanding its market presence, solidifying its role as a leading innovator in the financial technology sector.
