London-based fintech powerhouse Revolut has finally clinched a UK banking licence, setting the stage for a transformative leap in its service offerings and market presence.
After a protracted three-year wait, London-based fintech giant Revolut has finally been granted a UK banking licence by the Prudential Regulation Authority (PRA). This marks a significant turning point for the company, allowing it to offer a full range of banking services, including current accounts, overdrafts, loans, and deposit accounts.
This development not only enhances Revolut’s competitive edge but also provides its customers with the security of up to £85,000 protection under the Financial Services Compensation Scheme (FSCS).
Revolut’s journey to secure a UK banking licence has been fraught with regulatory hurdles and compliance issues.
The PRA granted the licence with restrictions, a common practice for new entrants in the UK banking sector. According to the PRA’s website, this stage enables new banks to “secure further investment, recruit staff, invest in IT systems and commit to third-party suppliers”.
During this stage, Revolut will be limited to holding only £50,000 of total deposits for customers.
“Mobilisation could take as little as a few months but cannot continue indefinitely and should take no longer than 12 months,” the PRA’s website further clarifies.
“Nothing changes for UK customers during this restricted period, which is to allow new banks like Revolut to complete the build out of their UK banking operations ahead of launching in the market,” Revolut says. “Until then, UK customers can continue to use their Revolut e-money account as they always have.”
Revolut has been in pursuit of a UK banking licence since 2021, when it first lodged its application with the regulator.
“We are incredibly proud to reach this important milestone in the journey of the company,” commented Revolut’s CEO and Co-Founder, Nik Storonsky. “We will ensure we deliver on making Revolut the bank of choice for UK customers.”
The licence approval follows Revolut’s resolution of several regulatory concerns, including financial reporting issues. The company recently received an unqualified audit opinion from BDO, addressing previous problems related to revenue recognition and IT systems.
With the UK licence secured, Revolut can now expand its product offerings in its largest market, boasting approximately 9 million customers in the UK and over 45 million globally.
Earlier this month, the company reported strong financial results for 2023, with pre-tax profits soaring to £344 million, a substantial increase from £6 million in the previous year. Revenues nearly doubled to £1.8 billion, driven by rising interest rates and growth in customer subscriptions.
“In 2023, we took our biggest steps yet on that journey. We accelerated customer growth and increased the adoption of our products across the board, driving a record year for Revolut financially,” Storonsky noted.
The company has also been expanding its workforce, adding over 2,000 employees in 2023, bringing its total headcount to more than 8,000.
Commenting on the latest developments, Francesca Carlesi, UK CEO of Revolut, describes the addition of a UK banking licence with restrictions as “a significant step forward for Revolut and for our customers.
“It is a tremendous responsibility to be a bank in the UK and we will work relentlessly to offer products and services that improve the financial lives of everyone who uses Revolut,” Carlesi added.
