After a three-year wait, Revolut has finally obtained a UK banking licence from the Prudential Regulation Authority (PRA) to officially be recognised as a licenced bank.
Whilst many of Revolut’s financial offerings will remain the same, a UK banking licence enables the fintech company to add and offer lending options for its customers which could become a vital aspect for Revolut moving forward.
Despite being cleared for the licence, the PRA will now conduct a Mobilisation process that will see Revolut operate with limited deposit restrictions before operating as normal under a banking licence.
As well as lending options, Revolut will now be able to expand its capabilities in the UK market to its over nine million customers.
After finally securing the licence, Revolut CEO Nik Storonsky, said: “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 UK customers.”
Revolut first submitted a banking licence application to the Bank of England in 2021, but the startup’s auditor found in March 2023 that it was unable to verify up to three-quarters-worth of revenue, approximately £636m, with the auditor BDO LLP describing Revolut’s books as “materially misstated”.
Questions surrounding if Revolut would ever gain a UK banking licence mounted over the last two years, especially after growing its global customer base to over 40 million and obtaining banking licences in Lithuania and more recently in Mexico.
What may have swung in the UK fintech’s favour with the PRA was its 2023 financial report that saw the company make record profits after tax at $545m (£422m), and total revenue surpassing $2.2bn (£1.7bn).
The company has been highly active in launching new products and bolstering its position in several markets to achieve record profit. Revolut X – the fintech’s dedicated cryptocurrency exchange – was also launched this year in a bid to stake its place in the growing UK digital asset market.
The approval of a UK banking licence also comes at a pertinent time for the company, after committing to call London home for another 10 years by moving its global headquarters to the former Thomas Reuters building in Canary Wharf.
Francesca Carlesi, UK CEO of Revolut, commented on what the UK licence means for the company, stating: “Today’s announcement is 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. This is the next phase in Revolut’s journey in the UK – we can’t wait to get going.”
Now with a UK banking licence in hand, Revolut can focus on its ambitions to ramp up its valuation to its projected target of $40bn.
Last month, the fintech began working with Morgan Stanley to explore selling $50m worth of its shares to outside investors to lift its early 2024 valuation from over $25bn to the $40bn benchmark.
The approval by the PRA for the banking licence will help bring clarity to any potentially interested suitors in investing in Revolut.
