Revolut, the British digital bank, has secured a banking licence from the Prudential Regulation Authority (PRA) in the United Kingdom after a three-year wait.
This means the London-based fintech giant will soon be able to hold customer deposits, and offer lending products such as credit cards, personal loans and mortgages.
Revolut said in a statement on Thursday it now enters the PRA’s “mobilisation” stage which comes with 12 months of restrictions.
During the mobilisation stage, otherwise known as “authorisation with restrictions,” banks must demonstrate they are ready to be fully operational while addressing additional issues identified by the regulatory body before they can trade entirely as a UK bank.
For example, Revolut can in the interim only hold £50,000 of total customer deposits and has restrictions on certain new offerings.
This transitional stage is a common industry process, with many new banks having gone through this, including: Monzo, Starling, Atom Bank, Zopa Bank, GB Bank and Kroo.
Significant Step Forward
Founded in 2015, the e-bank has grown rapidly by offering customers no-frills accounts, market-winning foreign exchange rates, and with one of their debit card (at a basic cost of £4.99) the ability to withdraw cash in over 120 countries.The fintech company also offers a premium app service which includes features such as overseas medical insurance and even gives users the ability to trade stocks and cryptocurrencies such as Bitcoin and Ethereum.
Revolut’s entry into the realm of fully licensed banking institutions is poised to shake up the competitive dynamics of the UK’s financial services industry, potentially prompting traditional banks to accelerate their own digital transformation efforts.
The formal banking licence for Revolut is exciting news for consumers who might benefit from market competition in credit card rates and loans.
Francesca Carlesi, UK CEO of Revolut, also said in the press release: “Today’s announcement is a significant step forward for Revolut and for our customers. 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.
Record Profits
Earlier this month, Revolut posted record profits. The company made a pre-tax profit of £438 million last year, up from a loss of £25 million in 2022, while revenue almost doubled to £1.8 billion.The e-bank has expanded aggressively in recent years, opening offices in new countries including Brazil and New Zealand in 2023.
The company has nine million customers across the UK and has added 12 million customers globally in the last year, taking the total to more than 45 million.
The current rate of expansion has seen the financial company outshine the growth of rival digital money firms like Monzo and Starling, which have roughly nine million and three million customers respectively.
However, unlike Monzo and Starling, Revolut was not allowed to offer lending products like credit cards, personal loans, or mortgages without a banking licence in the UK.
Revolut has already obtained a European banking licence, thanks to approval from authorities in Lithuania, allowing it to offer personal loans in France, Germany and Spain, as well as credit cards in Ireland and Spain. In 2023 Revolut expanded its loan book to £528 million.
Revolut first filed for a UK banking licence in 2021, and has repeatedly claimed that approval is just around the corner.
