Revolut Faces Regulatory Hurdles in UK Banking Licence Bid

Revolut’s ambition to secure a full banking licence in the United Kingdom has encountered significant regulatory challenges. The Bank of England is demanding more comprehensive information regarding the fintech company’s risk management infrastructure, particularly as it expands its operations internationally. This scrutiny arises from Revolut’s rapid growth, which officials believe necessitates a robust risk management framework.

The fintech giant, valued at approximately $75 billion, has acknowledged that it is unlikely to meet the July 2023 deadline for its twelve-month mobilisation phase. This phase follows the approval of the banking licence and is crucial for becoming fully operational. Revolut has stated it is “progressing through the final stages of mobilisation” and is collaborating “constructively with the Prudential Regulation Authority (PRA).” The company emphasizes that ensuring the quality of its operations is more important than adhering to a specific timeline.

Regulatory Expectations and Historical Context

The PRA has cautioned that if a new bank fails to complete mobilisation within the stipulated period or does not meet the required standards, it may face actions to revoke its authorisation. However, the PRA has clarified that this period is not rigid and can be extended for more complex entities. For instance, Zopa Bank received its licence in late 2018 but took an additional eighteen months to lift its mobilisation restrictions.

The recent demands from the PRA come in the wake of political developments involving Rachel Reeves, the Shadow Chancellor, who reportedly attempted to intervene in Revolut’s licensing process. Reeves had arranged a meeting between Revolut and regulatory officials, but this was blocked by Andrew Bailey, the Governor of the Bank of England. Reeves had previously attended the opening of Revolut’s global headquarters, where she praised the firm’s £3 billion investment in the UK economy.

Future Outlook and Leadership Perspective

During the launch of the new office, Nik Storonsky, Revolut’s co-founder and newly appointed CEO based in the UAE, emphasized that obtaining a fully-fledged banking licence in the UK remains the firm’s “number one priority.” Storonsky has been vocal about the challenges posed by the UK’s regulatory environment, describing it as burdened with “extreme bureaucracy.”

When asked about the possibility of a future public listing in London, Storonsky indicated that such a move would be “not rational” due to the greater liquidity available in international markets. As Revolut navigates these regulatory waters, the outcome of its licence application will not only impact the company’s future but also highlight the challenges faced by fintechs operating in a rapidly evolving financial landscape.