The Memo: Revolut has finally been granted its banking licence. What now?

With 45 million customers globally, it may surprise you that Revolut has only just gained its UK banking licence after a three-year wait. The company has been hailed as Europe’s most valuable start-up and Britain’s most valuable fintech firm. It disrupted the financial industry back in 2015, offering multi-currency accounts, commission-free stock trading and cryptocurrency exchange. Its crowdfunding attempt was also one of the most successful in history: retail investors on average invested around £2,000, and the value of those shares has now skyrocketed to around £860,000. The tentative approval from the Bank of England has now sparked rumours of a potential initial public offering (IPO) which could increase this figure even further.  

However, the banking licence was delayed due to regulators’ concerns about Revolut’s business practices. In 2016, the UK’s Financial Conduct Authority reportedly investigated the company due to whistleblower claims that it was not completing adequate anti money-laundering checks or flagging suspect payments. This investigation was closed in 2017, with Revolut stating that they fully comply with anti-money laundering and terrorist financing regulations. It has also battled accusations of an intense working culture, with long hours and high pressure. Only last month, the European Central Bank urged it to tighten its financial crime controls. To top it all off, the Financial Ombudsman Service has received an alarming number of complaints from Revolut customers who have been victims of fraud. So, it would be fair to say there have been some teething problems... 

Revolut is currently in its mobilisation period, giving it time to address any outstanding issues on the regulatory checklist such as accountability checks and IT system vetting. When the licence comes into full effect, Revolut customers will be covered up to £85,000 by the Financial Services Compensation Scheme. It will also allow Revolut to hold customer deposits, meaning the company will be able to roll out its own financial products, like loans and mortgages.  

Despite being one of Britain’s most valuable startups, Revolut CEO Nik Storonsky has said that, in the case of an IPO, he would consider floating the company across the pond, instead of in the UK. It seems the lengthy wait for a banking licence has left a sour taste in his mouth, claiming bureaucratic regulators and high taxes are bad for business. After all, targeting the US would be a massive blow to the already struggling London Stock Exchange.