Revolut secures UK banking licence after 3-year battle

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Revolut has obtained a UK banking permit, concluding a lengthy battle with regulators that lasted over three years. This achievement will greatly support the fintech company's growth strategies in the UK market.

The company from London, who initially requested the license in the beginning of 2021, announced on Thursday that they have been granted permission by the Prudential Regulation Authority.

The app encountered several issues, such as receiving a caution from auditors that they were unable to completely verify the revenue numbers in the organization's 2021 financial statements.

Revolut has a banking license in Europe from officials in Lithuania and recently obtained one in Mexico. However, the company's success largely depends on obtaining a license in the United Kingdom.

Getting the green light from the PRA means that the fintech company can now expand the range of products and services it offers in its largest market. This approval also signals a strong support for the company, increasing its likelihood of being officially recognized as a bank in other important markets like the US.

"We are very happy to have reached this important achievement in the company's journey and we are committed to making sure that Revolut becomes the preferred bank for customers in the UK," stated CEO Nik Storonsky.

Francesca Carlesi, who started working at Revolut as the head of its UK branch at the end of last year, expressed that obtaining the license was a big advancement for Revolut and its customers.

Revolut announced that it had been granted a license with limitations, which is typical for new financial institutions. This status will enable the company to develop its UK banking services before officially launching them.

Revolut was started in the UK in 2015 and now has approximately 9 million customers there. On a global scale, Revolut has over 45 million customers.

Revolut is transforming into a full-fledged bank, after previously being only an e-money payments company in the UK. This transition will enable Revolut to introduce new services such as mortgages to its customers. Additionally, Revolut customers will now benefit from deposit protection through the Financial Services Compensation Scheme, safeguarding their deposits up to £85,000.

The business, which was previously valued at $33 billion during a fundraising round in 2021, is currently discussing selling approximately $500 million worth of shares in a transaction that would give it a valuation of around $40 billion. Its ambitious international growth has made it significantly larger than other financial institutions that have been granted a UK license by the PRA in recent times.

As per advice from UK regulators, banking licenses are usually granted within a year of applying. However, Revolut experienced various obstacles and challenging discussions as they pushed for approval.

Authorities held off on making any decisions until they had a chance to review a fresh audit of Revolut's financial records for the entire year. BDO, the auditing firm, had previously raised concerns about potential errors in the fintech company's IT system that could have led to inaccuracies in their revenue report for 2021.

The Bank of England required Revolut to simplify its ownership structure in order to become regulated as a bank. This led to a disagreement with SoftBank, a Japanese investor, which was later settled.

The new company brought in City expert Martin Gilbert as chair in 2020 to help with its dealings with regulators. Unfortunately, last year it experienced the departure of the head of the UK branch that applied for the license and its chief financial officer.

The PRA refused to provide a comment.