Revolut is reportedly seeking to obtain a US banking licence to help achieve its goal of becoming the ‘number one global bank’.
Nik Storonsky, CEO and Co-Founder of Revolut, noted the struggle of a foreign exchange startup in the country to investors in Helsinki on Wednesday, adding that the US is credit-card driven and it is hard to compete without that option.
He said: “In the US, you need to be credit-driven. So in the US, we need to have a banking licence to launch a product.”
Storonsky went on to say that he regrets the fintech’s past expansion strategy, which was to expand fast across markets. This has had a negative impact on Revolut’s ability to obtain a US banking licence, according to the CEO.
He believes that a smaller firm would find it easier to gain a licence, saying: “For a long time I wanted to be as less regulated as possible, it was the completely wrong decision.”
Revolut has used permissions like e-money licences to enter new markets quickly. These are lighter permissions which are more restrictive than a banking licence. The UK-based fintech has also leveraged partnerships to operate in markets, such as its deal with Lead Bank to offer its service in the US.
Looking back on this strategy of obtaining lighter permissions, Storonsky added: “Your product becomes much less comprehensive compared to banking products, and as a result, there is not that much product market fit. So we had to redo the whole expansion later.”
An example of this is Revolut’s position in India, having received a Prepaid Payment Instrument (PPI) licence in 2021. This licence allows the company to offer prepaid cards and prepaid wallets, a limited range of services for such a huge population.
However, the company does hold banking licences in the UK and Mexico and can offer loans in several European countries. As mentioned above, these licences take longer to be approved for – Revolut waited three years after applying for its UK banking licence.
Storonsky now finds himself in a tough situation, wanting to continue expansion but understanding that this will not happen as fast as it did in the past couple of years.
The company announced recently that it had hit 50 million customers globally, though Storonsky stated he wants to double in size to 100 million daily active customers.
He concluded: “We want Revolut to be the number one global bank.”
