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Revolut Receives UK Banking License from Bank of England after Waiting Three Years
British fintech and neobank Revolut has finally received a banking license in the United Kingdom, ending a long waiting period. Revolut’s banking license will allow the company to compete with other established and large traditional banks and financial services companies offering similar services in the UK.
The Bank of England’s Prudential Regulation Authority (PRA) awarded Revolut the license, allowing it to enter a “mobilization” stage where it can design and build banking operations and services. However, the PRA’s greenlight is an “authorization with restrictions”, which imposes some limitations on fintech.
“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,” said Revolut’s UK CEO Francesca Carlesi.
Carlesi has described the license as “a significant step forward for Revolut”, which has now joined rivals like Starling Bank, Atom Bank, and Monzo Bank, all of which have full licenses from the PRA. According to a report, the PRA has licensed at least 36 new startups since 2013.
Revolut in Mobilisation Stage
The Bank of England’s website explains that the mobilization stage was introduced in 2013 after a review of requirements for prospective banks. This phase may last up to 12 months and will restrict deposits to £50,000. Banks that enter this phase will receive a list of conditions required to exit the stage set by the PRA and the Financial Conduct Authority (FCA). The requirements ensure that the bank will complete all steps necessary to demonstrate its readiness for full operations.
The BoE notes that banks may not make material changes to individuals or strategies during this phase. According to the website:
“Mobilisation should not be seen as the stage to commence a firm’s bank-building strategies, processes and systems, but rather a route which allows new banks extra time to finalise and deliver the development of their banks, ie IT infrastructure, governance and risk management frameworks, with the benefit of being authorised.”
The new license allows Revolut to expand the financial services offered to its 9 million customers in the UK after the mobilization stage. Revolut may offer customers loans, savings, and overdrafts, as it continues to expand its customer base.
Revolut first applied to UK authorities for a banking license in early 2021 and has waited for a license since then. In March last year, the neobank said the approval was imminent and could happen ‘any day now.’ However, it still had to wait another 16 months.
Revolut to Sell Shares at $40 Bn Valuation
Following the UK license, Revolut’s customer accounts will benefit from the Financial Services Compensation Scheme. The program protects customer deposits up to a maximum of £85,000 ($109,500) if the bank crashes.
Revolut is making interesting moves to ensure its success and improve its company profile. The company is looking to sell $500 million worth of its shares at a $40 billion valuation, a 21.2% increase from 2021’s $33 billion valuation. Revolut also recently launched Revolut X, a cryptocurrency exchange focused on professional digital asset traders. Before the launch, customers had access to crypto services within its primary app. Nonetheless, Revolut decided to launch a standalone exchange to compete properly in the crypto space.
Revolut Receives UK Banking License from Bank of England after Waiting Three Years
