Revolut has been granted a banking license from the Prudential Regulation Authority (PRA) in the U.K. This is a significant milestone for the London-based fintech company, particularly since it has been trying to secure this license since 2021.
Revolut has 45 million customers around the world, but its home market remains its most important one, with 9 million clients. The fintech also offers more products and services in the U.K. than in many other markets.
The company already has a banking license in the European Union. The Bank of Lithuania helped it get a license in 2018 and the company has been taking advantage of European passporting rules to operate in other European countries.
But the story has so far been different in the U.K. Not having a banking license in its home country has hindered the company’s capabilities when it comes to offering credit products (personal loans, credit cards, etc.) there, and controlling a bigger chunk of its infrastructure.
“We are incredibly proud to reach this important milestone in the journey of the company and we will ensure we deliver on making Revolut the bank of choice for U.K. customers,” Revolut’s co-founder and CEO, Nik Storonsky, said in a statement.
Things aren’t going to change overnight for Revolut’s customers. The company says that the PRA has granted an authorization with restrictions, and Revolut is entering the so-called “mobilisation” stage. Other challenger banks, like Monzo and Starline, have been through the same process in the past.
According to the Bank of England, this mobilization phase can last a few months but shouldn’t take longer than 12 months. The most important restriction during that stage is that the bank cannot hold more than £50,000 in total customer deposits.
The PRA has granted a license to a subsidiary of Revolut Group Holdings Ltd, so the company isn’t going to transfer its U.K.-based customers to this new subsidiary just yet. Instead, the company will keep operating as an e-money institution regulated by the Financial Conduct Authority.
In its latest annual report, Revolut reported $2.2 billion in revenue in 2023 (£1.8 billion). More importantly, the company managed to generate $545 million in pre-tax profit (£438 million).
This was the first time in the last three years that the company published its audited annual results before the deadline. In other words, Revolut is growing up and becoming a more transparent company on the financial front. That must have contributed to today’s decision from the Prudential Regulation Authority.
Source : Techcrunch
