both originally from Russia. After a three-year application process, the UK’s leading fintech firm has finally obtained a UK banking license with certain conditions. This achievement will allow Revolut to accept customer deposits and provide its branded loans, including mortgages, setting the groundwork for a future stock market listing.
A Significant Achievement
Revolut‘s tentative approval from the Bank of England signifies the start of its mobilization phase to establish its banking operations. This follows the submission of its application in 2021. The lengthy approval process dealt with several issues, including accounting discrepancies, prior regulatory infractions in the EU, and concerns regarding its reputation, notably claims of a hostile corporate culture.
In 2016, the Financial Conduct Authority (FCA) initiated an investigation into Revolut after a whistleblower reported inadequate measures against money laundering and failing to adequately identify suspicious transactions. The investigation was completed in 2017, and since then, Revolut has claimed complete compliance with anti-money laundering and terrorist financing laws, implementing initiatives to enhance its workplace culture.
The Cyberfinance Rating Agency PayRate42 has has placed Revolut on its Green Compliance and Green Risk lists.
Go to the Revolut profile on PayRate42.
Consumer Issues and Regulatory Oversight
Consumer advocacy organization Which? has expressed concerns regarding Revolut‘s methods for reimbursing scam victims. A representative indicated that while the banking license would protect customers’ funds under the Financial Services Compensation Scheme up to £85,000, they urged Revolut to exhibit a greater dedication to fraud prevention.
Transitioning Beyond E-Money Status
The banking license represents an essential development for Revolut, allowing it to evolve from an e-money institution to a full-fledged bank. This shift will enable Revolut to directly manage customer deposits, opening up new revenue opportunities through its own loans and mortgages. However, it will also bring the company under stricter regulatory scrutiny and require participation in the Financial Services Compensation Scheme.
Throughout the mobilization phase, Revolut will focus on resolving any outstanding regulatory concerns, including staffing, IT systems, and governance, to secure its complete UK banking status. The Bank of England notes that this process usually spans several months but should be completed within a year.
Global Impact and Future Outlook
The acquisition of a UK banking license is anticipated to influence financial regulatory authorities in other significant markets, including the US. Storonsky expressed pride in achieving this milestone, underscoring Revolut‘s aim to be the go-to bank for UK customers.
This announcement coincided with Revolut‘s report of record annual profits amounting to £438 million for 2023, marking a remarkable recovery from a £25 million loss the prior year. The surge in profits was attributed to rising interest rates and aggressive expansion efforts that added 12 million new customers in 2023.
Preparing for a Share Offering
Revolut has signalled a forthcoming Initial Public Offering (IPO). In its latest annual report, the company highlighted enhancements in its financial controls to meet the expectations set for publicly listed companies. Additionally, there are reports indicating plans to sell a portion of employee shares to private investors, which could potentially elevate its valuation to $40 billion (£31 billion). Previously, Revolut was valued at $33 billion in 2021, reinforcing its status as the most valuable fintech company in the UK.