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The UK’s Prudential Regulation Authority (PRA) has granted Revolut a banking licence with restrictions, marking a significant milestone in the fintech’s expansion into the country’s banking sector.
The licence places Revolut, which has more than 9m customers in the UK and 45m worldwide, into the PRA's "mobilisation" stage, also known as "authorisation with restrictions".
This transitional phase is designed to allow new banks to finalise their banking operations before fully launching their services in the market, and Revolut has been quick to remind people that other firms such as Monzo, Starling and Atom Bank also went through this process.
During this period, Revolut's UK customers will not experience any changes in their service and will continue to use their Revolut e-money accounts as usual while the company builds out its banking infrastructure.
Nik Storonsky, CEO of Revolut, expressed his excitement, stating: “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.”
In addition, Francesca Carlesi, UK CEO of Revolut, said this development 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. This is the next phase in Revolut’s journey in the UK, and we can’t wait to get going,” said Carlesi.
During the mobilisation stage, Revolut's banking operations are restricted, limiting the bank to holding only £50,000 in total customer deposits.
Until this stage is completed and the UK bank is fully launched, UK customers will continue to be served by Revolut Ltd, a UK e-money institution regulated by the Financial Conduct Authority (FCA), ensuring their funds are safeguarded in accordance with the Electronic Money Regulations 2011.
Governance question
The announcement comes within a week of reports that the European Central Bank (ECB) has urged Revolut to enhance its financial crime controls and governance for its European operations.
This call for improvement follows a review that highlighted issues similar to those that are thought to have affected the fintech’s bid for a UK banking licence.
The ECB, which began directly supervising Revolut Holdings Europe UAB earlier this year, has reportedly been conducting a comprehensive evaluation of the unit, and sources with knowledge of the situation cited by Bloomberg indicate that the regulator has found several deficiencies in the company's control environment and is demanding improvements.
