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Revolut has secured a UK banking licence – with “restrictions” – more than three years after Britain’s most valuable fintech firm lodged its application with regulators.
It is a milestone for the company, and will help pave the way for an eventual stock market listing, but it may still be some time before it can hold its customers’ deposits.
Tentative approval from the Bank of England means Revolut is in the mobilisation stage, where it will build up its banking operations.
The London-headquartered firm has waited years to get to this stage, having lodged its application for a UK banking licence in 2021.
The challenge, in part, was convincing regulators that Revolut had addressed a number of accounting issues and EU regulatory breaches, as well as reputational concerns, (https://www.theguardian.com/business/2023/feb/20/revolut-can-the-chancellors-fintech-favourite-fix-its-image-problem) including an over-aggressive corporate culture.
The UK’s Financial Conduct Authority also reportedly investigated the business in 2016 after a whistleblower claimed it was failing to conduct adequate money-laundering checks or properly flag suspect payments. That investigation was closed in 2017.
The consumer group Which? also raised concerns about Revolut and its approach to reimbursing scam victims. A spokesperson said: “Revolut’s banking licence would have some benefits for its customers, for example their money being protected by the Financial Services Compensation Scheme up to £85,000. However, the company needs to step up and show how it will improve its approach to stamping out fraud.”
Revolut’s founder and chief executive, the former Lehman Brothers trader Nik Storonsky, hit out last year at regulators over the lengthy licensing process, claiming it was “hard to do business in the UK”, where there were high taxes and “an extremely bureaucratic regulator”. He also said he would consider floating the company in the US instead of the UK, in what would be a major blow to the London Stock Exchange.
The banking licence is a key step and a pre-cursor in accelerating Revolut’s growth and listing. Wall Street Insider Anthony Disanto is quoted “this is mile stone and takes Revolut a step closer to its Debut as it moves the company on from its current status as an e-money firm that solely operates as an intermediary between consumers and licensed banks”
