Fintech revolution in Europe: Revolut applies for a full banking licence

8 Nov 2017

Revolut co-founder and CEO Nikolay Storonsky. Image: Revolut

Revolut wants to become a true bank and, in turn, upend the established order.

Fintech player Revolut, which recently revealed plans to open offices in Dublin, says it plans to become a fully fledged bank and has applied for a European banking licence.

Founded in 2015 by Nikolay Storonsky and Vlad Yatsenko in 2015, Revolut is an app-based banking alternative with a multi-currency card.

An account can be created in seconds, enabling users to instantly send free money transfers in 26 currencies to banks around the globe, spend fee-free in 120 currencies with the contactless Revolut card and exchange currencies at interbank rates in the app. It also offers peer-to-peer payments.

Revolut now boasts 950,000 users, including approximately 40,000 customers in Ireland, and wants to hit the 1m mark by the end of 2017. Among its users are 16,000 business accounts.

More than $6bn in transaction volumes have been recorded over the platform so far.

“We delayed applying for a banking licence because we wanted to focus all of our resources on product innovation from day one,” explained CEO Storonsky.

“Even without a banking licence, we have attracted over 950,000 users across Europe, many of whom consider Revolut as their primary current account and spending card.

“With our European banking licence, Revolut will offer enhanced consumer protection through the European Deposit Protection Scheme and will offer interest-bearing deposit and credit products. We’re building out a mobile-first, global financial platform to serve the needs of our unique international customers for the 21st century,” Storonsky said.

Europe at heart of a global fintech revolution

The fintech expects the banking licence to be in place by the first half of 2018 and will immediately begin offering deposit and credit services in selected markets, including overdrafts, personal loans and term deposits.

The banking licence will also enable Revolut to protect customers’ funds up to €100,000 under the European Deposit Protection Scheme. This will allow customers to confidently carry higher balances and take advantage of attractive deposit interest rates across multiple currencies.

In recent months, Revolut established a strong relationship with the Bank of Lithuania, which is a member of the European System of Central Banks, in order to ensure robust capital and liquidity management in advance of its banking licence application. Lithuania is one of the most exciting fintech hubs in Europe right now and boasts infrastructure and a consultative regulatory approach designed to support high-growth companies.

Revolut raised $66m in a Series B round in July 2017, led by Index Ventures and existing investors in Revolut, Balderton Capital and Ribbit Capital.

In related news, it emerged this week that Stripe, the payments platform founded by Irish brothers Patrick and John Collison, participated in a £71m funding round in another fast-emerging European challenger bank: Monzo.

Monzo has more than 20,000 current-account holders and the start-up bank has amassed something of a cult-like following in the UK, with almost 500,000 people using its distinctive hot coral cards and thousands more on the waiting list.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years