Revolut eventually gets a UK banking license

The UK’s Prudential Regulation Authority stated that British fintech firm Revolut had been granted a restricted banking license. There have been lengthy delays when Revolut first sought in 2021 for a banking license.

The London-based company will likely fortify its financial and business foundation in the UK before making its official debut.

“The news we made today represents a big advancement for Revolut and our clients. Being a bank in the UK carries a great deal of responsibility, thus Francesca Carlesi, CEO of Revolut UK, stated, “We will work tirelessly to offer products and services that improve the financial lives of everyone who uses Revolut.”

Revolut will be able to accept deposits from customers and provide credit cards and loans with a U.K. banking license. It now stands alongside a plethora of other challenger banks, such as Monzo and Starling, that want to compete with established banking giants like Barclays.

Getting a banking license is crucial in helping Revolut develop faster. This is because it allows the company to go beyond its current state as an e-money startup that acts as a middleman between customers and banks with licenses.

Having a license in the UK will enable it to retain client deposits, creating new revenue opportunities as it may begin financing loans and mortgages under its brand. However, it would have to guarantee customer deposits of up to £85,000 and comply with stricter restrictions.

The issuance of the banking license follows Revolut’s financial stability regaining in 2023. After posting a pre-tax loss of £25.4 million in 2022, the corporation turned a profit this month with a pre-tax profit of £438 million ($545 million) for 2023. Group revenues increased from £920 million in 2022 to £1.8 billion, a 95% increase.