Fintech banking app seeks licence as it nears one million users.
Perhaps more so than any other fintech firm, Revolut is proof that you do not necessarily need a banking licence to disrupt the banking industry. That being said, if you can get a banking licence, you ought to, as is becoming increasingly clear within the wider fintech industry.
Revolut has now fallen into line with many of its peers by announcing that it has applied for a European Banking Licence. In the past few years alone, European marketplace lenders Zopa and younited credit have each taken steps towards becoming banks, while payments giant Klarna and, of course, Revolut’s digital banking competitors in the UK such as Monzo and Starling Bank, are already licenced.
Revolut expects its own licence to be in place by the first half of 2018 – an optimistic timeline if the experience of others is anything to go by. The licence will allow the app, which began life as a currency exchange tool, to immediately begin offering deposit and credit services in select markets, including overdrafts, personal loans and term deposits. The licence would also allow Revolut to protect its customers’ funds up to €100,000 under the European Deposit Protection Scheme.
The fintech firm says that it has been working closely with the Bank of Lithuania, which is a member of the European System of Central Banks, to ensure “robust capital and liquidity management” in advance of filing its application. Revolut has also appointed three new non-executive directors with a combined total of 85 years in global banking to help bolster the proposition.
We also learn that Revolut has begun work on its own in-house payment processor – no doubt in response to the large number of card outages that have plagued the firm and its competitors (many of which have to date been reliant on third party processors). Revolut hopes that creating its own payment processor will improve the reliability of the service.
All the while the company continues to career towards one million users. It currently sits at around 950,000, a total which includes 16,000 businesses accounts and $6bn in transaction volume.
“We delayed applying for a banking licence because we wanted to focus all of our resources on product innovation from day one,” explained Revolut founder and CEO Nikolay Storonsky. “Even without a banking licence, we have attracted over 950,000 users across Europe, many of whom consider Revolut as their primary current account and spending card.”
Storonsky added that the banking licence would bring enhanced consumer protection, and reiterated the overarching purpose of the always-punchy disruptor:
“We’re building out a mobile-first, global financial platform to serve the needs of our unique international customers for the 21st century.”
Now in its sixth year, the AltFi London Summit returns on 18th March 2019 to 155 Bishopsgate. Last year proved to be a crucial turning point for the key players building the future of finance. Leading platforms launched oversubscribed IPOs, digital banks proliferated and mainstream financial institutions started their own disruptive propositions. With 2019 certain to be another landmark year, more questions will be asked by regulators with investor interest in disruption also poised for more rapid growth.