Revolut UK Banking License: What It Means for Fintech

Revolut has been granted a full UK banking license, marking a significant milestone for the fintech company.

This license allows Revolut to offer a wider range of services, including current accounts, credit cards, and loans, to its customers in the UK.

The UK banking license is a major achievement for Revolut, demonstrating its commitment to providing innovative financial services to its users.

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Revolut, a British fintech startup, has finally received a banking license with restrictions from the U.K.'s Prudential Regulation Authority (PRA) after a three-year wait.

The license allows Revolut to take customer deposits and issue products like loans and credit cards, joining other challenger banks like Monzo and Starling in the market.

Revolut's UK CEO Francesca Carlesi said in a statement that the company will work relentlessly to offer products and services that improve the financial lives of everyone who uses Revolut.

The company's financials have also returned to a stronger footing, with a 2023 pre-tax profit of £438 million and a 95% increase in group revenues to £1.8 billion.

Revolut's share structure had been a major issue in the past, but the company has since resolved this by restructuring its ownership with major Japanese tech investor SoftBank.

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Revolut, a British fintech startup, has finally received a banking license with restrictions from the U.K.'s Prudential Regulation Authority (PRA) after a three-year wait.

The company first applied for the license in 2021 but faced lengthy delays, with one of the key issues being its share structure being inconsistent with the PRA's rules.

Revolut has since resolved this issue by restructuring its ownership with major Japanese tech investor SoftBank.

The banking license comes after Revolut's financials returned to a stronger footing in 2023, with the company reporting a pre-tax profit of £438 million ($545 million) and a 95% rise in group revenues to £1.8 billion.

Revolut now has time to build up its U.K. banking infrastructure and operations ahead of officially launching.

With the banking license, Revolut will be able to take customer deposits and issue products like loans and credit cards, joining a host of other challenger banks like Monzo and Starling.

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Revolut's UK CEO Francesca Carlesi said in a statement, "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."

Here are some key stats about Revolut's financial performance in 2023:

The mobilisation stage is a critical phase in the Bank of England's new bank authorisation process.

It's optional, providing new banks like Revolut with extra time to finalise their IT infrastructure, governance, and risk management frameworks.

During this period, banks are authorised but must adhere to specific restrictions, such as a £50,000 annual deposit limit per customer.

This limit can be circumvented by continuing to offer services as a payment institution under an existing e-money licence from the Financial Conduct Authority.

The mobilisation period must be concluded within 12 months, with a Variation of Permission application required at least three months before the period's end.

Firms are expected to avoid making material changes to their strategy or key personnel during this stage.

This means Revolut will have to be strategic about its plans, including a potential secondary share sale round for employee shareholders.

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Revolut has a customer base of 45 million globally, indicating its significant presence in the international market.

The fintech company operates as a bank under a licence from Lithuania in the European Union, and it recently secured a banking licence in Mexico.

Revolut is aiming for a valuation of $45 billion through a secondary share sale round for its employee shareholders.

This financial maneuver will provide the necessary capital to fuel further expansion and innovation.

Revolut continues to enhance its service offerings, such as partnering with CMC Markets to offer CFDs.

The company is also introducing new lending products in the UK, a move that reflects its commitment to delivering cutting-edge financial solutions to its global customer base.

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Revolut is now able to offer a wider range of products and services to its UK customers, thanks to its new banking licence.

This expansion includes lending products, such as overdrafts, loans, and savings accounts, which were previously unavailable to Revolut customers.

Revolut can now compete more effectively with traditional banks and other challenger banks like Monzo and Starling.

Deposits in Revolut accounts are now protected up to £85,000 under the Financial Services Compensation Scheme (FSCS), providing greater peace of mind for account holders.

Revolut has also partnered with CMC Markets to offer contracts for differences (CFDs) products to its customers.

Revolut has streamlined its services by terminating the Lite brand in several emerging markets.

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