Kroo receives restricted banking license from FCA and PRA
The Neobank startup Kroo has announced that it has received a restricted banking license from the Financial Conduct Authority and the Prudential Regulation Authority.
This restricted banking license gives it the authority to collect deposits of up to £50,000 in total and also offer other smaller financial services for its customers. This phase has been given to the company so that it can test out its systems and its infrastructure and make sure that it will be able to handle bigger deposits, more features, and a high number of consumers when it switches to the final banking license. This is expected sometime in the next year once this testing phase is complete.
Andrea De Gottardo, CEO of Kroo, said, “It is incredibly exciting to finally be a bank that is authorized with restrictions. Very few firms in the UK get to this point and this represents a huge milestone for the entire team.”
The neobank has raised $24.5 million just a couple of weeks back as it looks to expand and grow across the European region and also add more features to its application. It is expected that as it grows to other regions, it would need to apply for a variety of licensing and regulation in those regions as well for which a strong base would be needed and this funding would be put to good use for these activities.
The bank had started off its services with a simple prepaid card and an app which the users can use to make payments, add friends, track spending, etc. which the users have been finding very useful so far, which is one of the reasons for its growth over the last couple of years. The bank also seeks to slowly wind down its prepaid cards as it switches to the full banking license and when that begins to happen, it seeks to transfer its existing users to the new accounts. Once it gets the full banking license, it will be able to offer savings and current accounts and other financial services that any bank would be able to offer.
Neobanks are expected to slowly and steadily replace the traditional banks and the legacy systems in the coming years as the world becomes digitalized and the financial services start getting delivered through mobile apps and the internet which is what the latest generation of users prefer.