Whilst challenger e-payments companies have been embraced by consumers – challenging new and clunky digital banking services introduced by legacy banks – it has taken 9 years in business for Revolut to be considered a fully-fledged bank with a UK banking licence.
The company was issued a UK banking licence, ending a 3 year battle with the regulator over its future expansion in the home market. Revolut is a UK founded company set up in London in 2015.
The “challenge” posed by emerging banks to traditional banking institutions based on legacy systems has been the all- encompassing, digital-only service, keeping up with the modern era of digital transformation. Digital transformation has enabled more options for convenience in banking and other services and security versus fraud risks of physical banking. So, Revolut show promise in the financial services sector and looking to extend the services freely to the next consumers.
The delay with issuing the licence is reported to have derived from revenue inaccuracies of the company’s revenue in the audit. Auditors were not able to fully verify revenue figures in the group’s 2021 accounts.
However, Revolut does operate in foreign countries, for example obtaining a European licence in Lithuania and Mexico this year. For its plans to grow further and consolidate its products in the biggest market, they needed the UK licence.
It will also provide assurance for other big markets like the U.S. to regulate Revolut as a bank.
Speaking on the difference of players in the market, Denny Prvu, Director of Architecture at the Royal Bank of Canada, said challenger banks want to be “global, quick response”, whereas legacy banks want to “see you in person” and have more fraud incidents or “challenges” that emerging banks don’t necessarily have.
Chief Executive, Nik Storonsky commented on the “important milestone in the journey of the company” and said “we will ensure we deliver on making Revolut the bank of choice for UK customers”.
They have achieved the regulation with conditions, the normal for new lenders, as a bank will offer new products like mortgages. Far bigger than other lenders to be issued a UK licence, the business is in talks to sell $500 million of shares, which would value it at $400 million, the Financial Times reported.
The mis-estimated report of their 2021 revenue was attributed to the design of the fintech’s IT system.
