British fintech giant Revolut has finally achieved a major milestone, securing a full banking licence from the Prudential Regulation Authority (PRA) after a protracted five-year regulatory process. This approval allows Revolut to operate as a fully-fledged bank in the UK, offering current accounts to retail and business customers while holding deposits and branching into more lucrative financial products like loans and mortgages.
Overcoming Regulatory Hurdles
The journey to this licence was fraught with challenges. Revolut initially lodged its application in 2021 but faced significant delays due to accounting issues, EU regulatory breaches, and reputational concerns, including an over-aggressive corporate culture. These obstacles required the company to convince regulators that it had adequately addressed these problems before gaining full approval.
In 2024, Revolut was granted a restricted banking licence, permitting it to test banking systems with a limited number of customers but capping total customer deposits at £50,000. This interim step did not allow full-scale banking operations, highlighting the importance of the new unrestricted licence.
Tensions in the Financial Sector
The lengthy approval process led to tensions within the City of London. Andrew Bailey, the Governor of the Bank of England, intervened to block a meeting that Chancellor Rachel Reeves attempted to arrange between regulators and Revolut last year. This move underscored concerns about political interference in the independent regulatory process surrounding the fintech's banking licence.
Strategic Expansion and Growth
Nikolay Storonsky, co-founder and chief executive of Revolut, emphasized the significance of this development, stating, "Launching our UK bank has been a long-term strategic priority for Revolut and marks a significant moment in our journey. The UK is our home market and central to our growth." The company plans to roll out current accounts to a small number of new customers within days, with broader banking services to follow.
Revolut, which boasts 13 million customers in the UK and was valued at $75 billion last year, has ambitious global plans. It aims to launch in 30 new markets by 2030 and recently announced a £10 billion investment across its global operations over the next five years. In September, the group unveiled plans to allocate £3 billion of global investment specifically for UK expansion, creating 1,000 jobs.
From Startup to Banking Powerhouse
Founded in 2015 as a money transfer and exchange service, Revolut has grown exponentially, now serving 70 million customers worldwide. The full banking licence marks a pivotal step in its evolution from a fintech startup to a comprehensive financial institution, poised to compete with traditional banks in the UK and beyond.
