Hopes of cheaper mortgages and loans as Revolut gets bank licence
The decision means the app-based alternative to traditional banks now has the right to dramatically increase the range of services it offers.
UK fintech firm Revolut has finally been awarded a banking licence, triggering hopes of cheaper home loans, credit cards and loans.
The decision means the app-based alternative to traditional banks now has the right to dramatically increase the range of services it offers.
Revolut has grown rapidly in the UK on the basis of offering a free current account and a pre-paid debit card that enables cash machine withdrawals in 120 countries.
Its other services include a crypto-currency exchange, allowing users to convert currencies into Bitcoin, Litecoin, Ethereum, Bitcoin Cash or XRP
There are vaults for budgeting and saving money as well as mobile phone and overseas medical insurance.
The granting of a banking licence by the Prudential Regulatory Authority (PRA) means that customers’ deposits are protected up to £85,000, while it can massively extend the services it offers.
The fact that is based around tech and an app means its costs are much lower than traditional banks and, in theory, it will be able to undercut them on mortgages, credit cards and loans.
Francesca Carlesi, UK CEO of Revolut, said: “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.”
Revolut recently published its financial accounts for 2023, with group revenues of $2.2billion and profits before tax of $545million.
The fintech, which has over nine million UK customers, now enters the ‘mobilisation’ stage, also referred to as ‘authorisation with restrictions’, as it builds out its banking operations.
This is a common step for many new banks in the UK and nothing will changes for UK customers during this restricted period.
Revolut waited years for approval, having lodged its application for a UK banking licence in 2021. The company faced a challenge to convince regulators that it had addressed a number of accounting and reputational concerns in recent years, after EU regulatory breaches, questions over its corporate culture and the fact that it was late in filing its financial performance records.
The business was founded by Nikolay Storonsky and Vlad Yatsenko. Mr Storonsky is Russian-born, but carries a British passport and has lived in the UK since the age of 20.
Mr Yatsenko is Ukranian British, and has lived in the UK since 2010.
Mr Yatsenko and Mr Storonsky created start-up Revolut and launched it in July 2015 at the Level39 tech accelerator in Canary Wharf.
Prior to setting up Revolut, Mr Storonsky worked for Credit Suisse and Lehman Brothers, while Mr Yatsenko spent five years building financial systems for major investment banks.
The duo said that they started Revolut because they were frustrated with the fact that traditional banks were taking so long to introduce digital banking services for younger customers, who prefer to access most services through their smartphones. Latest estimates suggest it could now be worth as much as $45 billion.
Mr Yatsenko serves as Revolut's chief technology officer, while Mr Storonsky is chief executive of the firm.
Mr Storonsky said: “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.”
