Revolut seeks a UK banking licence

Darren Sinden

Revolut has been used by more than 12.0 million individual customers and 500k business customers according to the group’s website

Open a bank account directly with a central bank

Revolut, the currency exchange and payments platform has set its sights on disrupting another sector within financial services, with an application for a UK banking licence.

If the application is granted the app would be able to offer its clients full-service current accounts, pay interest on balances and market other products to customers such as deposit accounts, overdraft facilities and loans.

Revolut has been used by more than 12 million individual customers and 500,000 business customers according to the group’s website.

A UK banking licence would theoretically turn the business into a genuine challenger bank and would also provide eligible customers with the protection of the UK Financial Services Compensation Scheme (FSCS) which insures up to £85,000 of customers deposits against fraud or business failure.

Revolut secured a Lithuanian banking licence bank in 2018 but becoming a UK bank would be a notable milestone. The Lithuanian banking status has allowed Revolut to test the water in European markets for new banking products, which we assume it would ramp up as and when it receives UK permissions.

Becoming a UK bank is also likely to significantly enhance Revolut’s valuation. Back in July 2020, the fintech raised $80 million as part of a larger Series D funding round, that valued the business at $5.50 billion.

At the time Revolut said it would use the new cash to build out its European banking offer and to add new features to its US operations.

In the UK Revolut launched a new subscription service last month called Revolut Plus which offered purchase protection insurance on card purchases and refunds on tickets for events that customers couldn’t attend for a monthly fee of £2.99.

The launch was seen as a way to try and attract new customers to the brand, who were concerned about online transactions during the pandemic. Revolut also recently secured a temporary crypto currency registration from the UK FCA which was necessary as UK regulators are scrutinising the way that financial services businesses apply anti-money laundering regulations to cryptocurrency transactions and payments.

The temporary licence, which was granted because of a backlog of unprocessed applications at the UK regulator, will expire in July.

Speaking about the application for a banking licence Nik Stronsky, Revolut’s CEO said: “We want to be the best in class for customer experience, value and capabilities, and offering full bank accounts allows us to do just that” and that “In the future, we want to offer many more innovative products to our UK customers and we are excited to continue driving innovation and competition in the banking industry.”

Last week one of Revolut’s US fintech peers, SoFi, which itself had applied for US banking charter back in October, announced it would go public via a SPAC, in a deal that would value the business at around $8.50 billion.

No doubt Revolut’s management and VC backers will be watching that transaction very closely indeed from here on in.

Read this next

Industry News

Nuvei enters China following licenses in Australia, Singapore, and Hong Kong

The expansion into China represents more than just a geographic milestone for Nuvei. It also adds an essential component to the company’s comprehensive suite of alternative payment methods (APMs), which currently counts 634 different options. These APMs play a crucial role in catering to local market preferences, thereby enhancing Nuvei’s value proposition for businesses looking to penetrate new markets within the APAC region.

Institutional FX

LiquidityBook launches LBX PMS 2.0 after acquiring Messer

With this rollout, LiquidityBook aims to meet the diverse requirements of its clientele, ranging from startup hedge funds and asset managers to broker-dealers and outsourced trading desks.

Institutional FX

Celoxica enters Australia to offer low latency market data and execution services in APAC

“There is a significant opportunity to deliver fast and efficient market access to APAC financial market participants, including trading firms, brokers, exchanges, and service providers. I am eager to extend our reach in this crucial market.”

Institutional FX

Cboe to launch four new Credit Volatility Indices (Credit VIX)

“The Credit VIX Indices are expected to provide new clear signals on bond market sentiment, and act as a new barometer of corporate credit risk in North America and Europe.”

Executive Moves

TradeZero hires Leo Ciccone as Chief Compliance Officer (CCO) for TradeZero Canada

“Leo brings to TradeZero broad and comprehensive experience coupled with deep business and regulatory relationships that will assist us in ensuring we meet and exceed industry best practices and to further our growth initiatives going forward,”

Institutional FX

Apex launches fractional fixed income trading for retail investors

“The ability for people – and not just high net-worth investors – to easily add fixed-income and diversify their portfolios is a game-changer.”

Institutional FX

MarketAxess launches Open Trading for EM local currency bonds

In an era where diversification and hedging against market risks have become imperative, this new feature could very well serve as a linchpin for international investors looking to diversify their fixed-income portfolios with EM local currency bonds.

Industry News

CFTC Chair Behnam’s keynote speech at FIA Expo 2023 focused on FX and Crypto frauds

Over the past fiscal year, the CFTC has levied more than $6 billion in monetary relief through various enforcement actions. The agency is also moving against entities falsely claiming to be CFTC-registered futures commission merchants (FCMs) and registered foreign exchange dealers (RFEDs).

Market News

Australia’s Trilateral Economic Ties with the US and China

Australia’s leading stock market index, the S&P/ASX 200, has been on a downward trend for the past three weeks. From a technical perspective, the price still remains in a consolidation, but the occurrence of lower highs indicates increasing selling pressure, and potentially a descending-triangle.