Financial technology firm Revolut Ltd. is facing significant challenges in its global expansion efforts due to a prolonged review of its UK banking license application. The Bank of England's examination has now stretched into its fifteenth month, creating a ripple effect that is slowing down the company's authorization bids in several other key markets.
Key Takeaways
- Revolut's application for a full UK banking license has been under review by the Bank of England for over 15 months.
- This delay is reportedly causing setbacks for the company's license applications in the United States, Australia, New Zealand, and Switzerland.
- International regulators are awaiting the decision from Revolut's home watchdog before granting their own approvals.
- Securing the UK license is described as a top strategic priority for CEO Nik Storonsky and is crucial for Revolut's future growth and product offerings.
Prolonged UK Review Creates a Bottleneck
Revolut, one of Europe's most valuable fintech startups, submitted its application for a full UK banking license well over a year ago. The process, managed by the Bank of England's Prudential Regulation Authority (PRA), is designed to ensure that any new bank has the financial stability, risk management, and governance structures to protect consumers.
However, the review has extended far beyond typical timelines, now entering its fifteenth month without a final decision. This lengthy examination has become a central point of focus for the company, as its outcome holds significant weight for its operations both domestically and abroad.
The Significance of a Full Banking License
A full banking license in the UK would allow Revolut to operate as a traditional bank, enabling it to offer a wider range of services. These include providing full deposit protection under the Financial Services Compensation Scheme (FSCS), as well as offering mortgages and personal loans directly, rather than through partner institutions. It is a critical step for moving beyond its e-money institution status.
The International Domino Effect
The delay in its home market is now having tangible consequences for Revolut's international ambitions. According to sources familiar with the company's operations, financial regulators in multiple countries have indicated they are closely watching the UK's decision-making process.
Executives at Revolut have reportedly been informed by regulatory bodies in the United States, Australia, New Zealand, and Switzerland that progress on their local license applications is linked to the outcome of the UK review. This creates a regulatory logjam, effectively pausing the company's expansion into these lucrative markets.
International regulators often look to a company's domestic watchdog for a signal of confidence. Approval from the Bank of England would serve as a powerful endorsement of Revolut's internal controls and business model, making it easier to gain trust and authorization elsewhere.
A Global Regulatory Precedent
It is common practice for financial regulators to consider the standing of an applicant in its home country. The approval from a respected authority like the Bank of England acts as a form of due diligence, assuring other nations that the firm has met a high standard of scrutiny.
A Top Priority for Leadership
The challenge of securing the UK license has elevated the issue to the highest levels of the company. Revolut's co-founder and CEO, Nik Storonsky, has reportedly identified obtaining the license as his "number one priority." This underscores the strategic importance of the license not just for UK operations but as a key to unlocking the company's broader global strategy.
Without the license, Revolut's ability to compete with established banks on a level playing field is limited. It prevents the firm from fully leveraging its massive user base, which stands at over 20 million customers globally, by offering more complex and profitable financial products.
"Regulators in other countries would like to see the fintech certified by its domestic watchdog as they work to sign off on other licenses," according to people familiar with the matter, highlighting the interconnected nature of global financial regulation.
Navigating a Complex Regulatory Landscape
The path to becoming a fully licensed bank is notoriously complex for fintech companies. Traditional regulators are often cautious when assessing firms with novel, technology-driven business models. They scrutinize everything from corporate governance and anti-money laundering (AML) protocols to the sustainability of the company's financial projections.
Revolut has undergone significant changes to bolster its application, including appointing experienced figures from the traditional banking sector to its board and executive teams. These moves are intended to reassure regulators that the company has the necessary expertise to manage the risks associated with banking.
Key Jurisdictions Awaiting UK Decision
- United States: A highly competitive and regulated market where a strong regulatory track record is essential.
- Australia: The Australian Prudential Regulation Authority (APRA) maintains strict standards for banking licenses.
- New Zealand: The Reserve Bank of New Zealand oversees banking authorizations.
- Switzerland: A key European financial hub where regulatory approval is a significant milestone.
As the wait continues, the pressure mounts on Revolut. The delay not only stalls its geographic expansion but also impacts its ability to roll out new products and services that depend on a full banking charter. The final decision from the Bank of England will be a pivotal moment, determining the pace and direction of the fintech giant's growth for years to come.
