Revolut UK Bank License Stalled Over Risk Control Concerns
Revolut’s rapid global expansion reportedly is delaying its banking license in its home country.
The British FinTech has been awaiting a full banking license from U.K. regulators since last year. But as the Financial Times reported Tuesday (Oct. 14), that process has stalled due to regulators’ worries over whether Revolut’s risk controls can keep up with the pace of its growth around the world.
Sources told the FT that the Bank of England wants a commitment from the company — which has 65 million customers and does business in roughly 40 countries — that it will develop a risk management system that matches the scope of its international expansion efforts.
Revolut was granted its U.K. banking license last year following a three-year wait, though the company is still subject to some restrictions in what is known as the mobilization period. Both Revolut and the central bank’s Prudential Regulation Authority (PRA) have said this period is not a fixed time and could take longer when larger companies are involved.
As the FT noted, a full license would let the company — Europe’s most valuable FinTech — access the U.K. lending market.
The PRA is examining the strength of Revolut’s controls in the U.K. and abroad before giving it a full banking license, sources told the news outlet.
A spokesperson for the Bank of England declined to comment when reached by PYMNTS. Revolut also declined to comment, but shared a statement from July:
“We are progressing through the final stages of mobilization and continue to work constructively with the PRA. Given Revolut’s global scale, this is the largest and most complex mobilisation ever undertaken in the UK. A thorough review is an expected part of the process and getting this right is more important than rushing to meet a specific date.”
According to the FT, Revolut announced at the opening of its new headquarters last month that it plans to enter 30 new markets before the decade’s end and reach 100 million customers.
At the same event, Co-founder Nik Storonsky said that landing a full U.K. banking license was Revolut’s “number one priority” and that it had been a mistake for Revolut to prioritize growth over becoming properly licensed in its early years.
“When we started international expansion many years ago, we tried to short-cut our banking licences and apply for lighter licences, e-money license, FX licences, payment licences … and it was a worse product,” Storonsky said, per insiders who spoke to the FT.
In related news, PYMNTS wrote last month about efforts by Revolut and other neobanks to expand into the U.S. by targeting younger customers. In addition to Revolut, both U.K.-based Monzo and Dutch FinTech bunq are expanding their foothold in America.
“The common denominator across these expansion strategies is the focus on Generation Z,” PYMNTS wrote, pointing to in-house research which “highlights just how attractive this demographic is to digital-first challengers.”
Close to 72% of Gen Z consumers say they use a digital wallet at least once per week, versus just 38% of Gen X. Another 62% of Gen Z told PYMNTS Intelligence they would consider making a neobank their chief bank account provider, outpacing all other generations.
“And nearly 7 in 10 Gen Z respondents told PYMNTS they prefer to manage their financial lives entirely online, underscoring the digital-first mindset that plays to neobanks’ strengths,” that report added.
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