Revolut today ended a painful three-year wait to secure a British banking licence in a breakthrough moment for Britain’s biggest fintech, paving the way for major expansion.
The Canary Wharf-based business, which first applied for a licence back in 2021, received confirmation of the verdict from the UK’s Prudential Regulatory Authority, opening the firm up to offering a range of new financial services to compete with the biggest High Street banks.
The $45 billion firm said it will now enter the ‘mobilisation’ stage before obtaining a full licence, during which time banks can only hold £50,000 of total customer deposits. According to the Bank of England, mobilisation “could take as little as a few months but cannot continue indefinitely and should take no longer than 12 months.” Revolut had already obtained a banking licence in Lithuania in December 2021 and is also regulated by the European Central Bank.
The decision, which has taken significantly longer to arrive than expected, ends months of speculation that the Bank of England was minded to turn down Revolut’s banking licence application. A qualified audit opinion from accountants at BDO last year, the range of cryptocurrency services offered and the number of Russian shareholders and senior management at the firm are thought to have contributed to the cautious approach by regulators.
But CEO Nik Storonsky previously said the cause of the delay “is not really us” and expressed frustration at the regulatory environment in the UK, last year ruling out an IPO in London. “If you are a business and you want to build something, uncertainty is a thing that kills you because you don’t know what you can do, what you can’t do,” he said.
But Storonsky, who has a net worth of £4.9 billion according to the Standard’s Tech Rich List, said today: “We are incredibly proud to reach this important milestone in the journey of the company and we will ensure we deliver on making Revolut the bank of choice for UK customers.”
Earlier this month, Revolut was handed a squeaky-clean audit report by BDO after two successive years of qualified opinions. Previous audit reports warned on problems with revenue recognition connected to Revolut’s IT systems. Since 2021 the company’s annual IT spend has nearly tripled to £47.4 million.
The London-based business, which recently celebrated its ninth anniversary and will shortly move into a huge new office space in Canary Wharf, recorded a £344 million profit for 2023, compared to £6 million the previous year, while revenues nearly doubled to £1.8 billion.
That was helped along by rising interest rates, which added an extra £400 million in interest income during the year, as well as a more-than 50% jump in customer subscription income, which now accounts for around £250 million of the firm’s turnover.
In contrast to wider trends in the tech sector, which as a whole saw more than a quarter of a million layoffs in 2023 according to job cuts tracker layoffs.fyi, Revolut has been on a hiring spree, adding more than 2,000 staff to top 8,000 by the end of last year, with plans to increase headcount by an even greater number in 2024.
According to the Wall Street Journal, the firm is on the cusp of reaching a deal to sell $500 million worth of employee shares at a valuation of $45 billion, making it the world’s second-most valuable fintech.
