The Revolut card can be seen in this illustrated photo taken in Krakow, Poland on March 29, 2024.
Jakub Porzycki | nuphoto | Getty Images
LONDON – A year after securing an early UK bank license, Revolut is still waiting for full regulatory approval.
The Fintech giant was granted a restricted banking license from the UK’s Prudential Regulator (PRA) in July 2024, ending the long-standing application process that began in 2021. The PRA is the Bank of England unit.
This important victory has made Revolut what is known as the “mobilization” phase of the corporate journey to become a full-fledged bank.
During this period, the company is limited to holding only £50,000 of its total customer deposits. Thousand billion pounds of customers deposit major high street lenders such as Barclays, HSBC and Santander.
Revolut’s customers in the UK are not in the banking industry, but the company’s electronic money unit still serves. This means that it is not directly insured by a financial services compensation scheme that protects customers up to £85,000 in the event of a company failing.
The size of the obstacles and inversions is one of the reasons why the company’s banking approval process takes longer than expected, analysts told CNBC.
Revolut is currently awaiting a consumer credit license. This will allow you to provide credit cards and other services in the UK.
Meanwhile, the Financial Times reported on Tuesday that a meeting organized by British Rachel Reeves with Revolut was cancelled after an intervention from Bank of England Gov. Andrew Bailey.
CNBC was unable to independently validate the reports. BOE declined to comment, and the Treasury did not immediately respond to CNBC’s request for comment.
A Revolut spokesperson said the company was unable to comment on the details, but it is on track to launch a fully regulated UK bank this year.
“We are moving on to the final stages of mobilization and continue to work constructively with the PRA,” she told CNBC via email.
“Given the global scale of Revolut, this is the largest and most complex mobilization ever made in the UK. A thorough review is a predicted part of the process, and getting this right is more important than rushing to meet a specific date.”
What is the hold-up?
Barney Hussey-Yeo, CEO of Fintech Firm Cleo, said the “protection-growth regulatory stance” from the UK is likely a contributor to the delays that will turn the withdrawal of the mobilization stage.
“Revolut is a regulated bank in over 30 countries, including the world’s most stringent jurisdictions,” he told CNBC.
“If it is not sufficient measure or rigour for the PRA, it raises serious questions about UK regulatory expectations.
Simon Taylor, head of strategy for fraud prevention platform Sardine AI, said he was nervous about regulators being wrong due to the “scar tissue” of the 2008 financial crisis.
“The UK has historically had one of the world’s most risk-averse regulatory stances, especially when it comes to capital requirements,” he told CNBC.
A huge initiative
Another factor while playing is the size of the Revolut. Other companies have never entered the mobilization phase of bank approvals, with over 500,000 customers. Revolut serves more than 10 million customers in the UK
Once the mobilization phase is over, Revolut will need to gradually begin moving its customers into UK banking.
This, coupled with Revolut’s already long history in the UK market and complaints about fraud, has become a “complex player to approve,” according to Taylor.
“Many major banks have historically complained about Revolut being a major source of their fraud risk,” he told CNBC. “My guess is that these complaints and issues are published in the BOE regulatory report, and there are material and well-founded concerns.”
Still, Taylor admitted that Revolut “has some of the most sophisticated technologies to detect and prevent these issues, and is on the forefront of dealing with fraud issues.”
“Symbolic victory”
It is important for the UK government to ensure that Revolut has full permission to run the bank. In particular, as capital gains taxes rise, it has created an hostile environment for entrepreneurs as they face criticism from the tech industry, which has shifted to non-dominant tax status.
“All the factors that make up UK wealth — employment, taxes and stock gains — are eroding,” said Hussey-Yeo of Cleo, adding that the risk that rich, valuable fintechs like Revolut can move outside the UK if such measures continue.
Taylor of Sardine.ai said that fully bank-approved Revolut “will be a ‘significant victory on a massive scale’ for the government.
“prime minister [of the Exchequer] While we cannot afford to lose Revolut to another jurisdiction, Revolut has a global market focused on many ambitious suitors in its business, with little motivation from the UK,” he told CNBC.
