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Banking License · Fintech · Lending · Revolut
Revolut has successfully secured a full banking license in its home UK market, concluding a four-year application process and an unprecedentedly long mobilization period.
This milestone, which began in 2021, is pivotal for the fintech giant, which already serves 13 million UK customers and has pledged £3 billion in investment and 1,000 new jobs. Previously, Revolut's UK banking division was severely restricted, limited to holding no more than £50,000 in total customer deposits.
The full license removes this constraint, enabling Revolut to accept customer deposits at scale. This is crucial as deposits provide cheap funding for lending, a model traditional banks use to generate significant profits.
Lending, encompassing personal loans, credit products, and potentially mortgages, is the most profitable segment in retail banking and will fundamentally shift Revolut's revenue mix and earnings profile. This move positions Revolut in direct competition with established UK banks like Barclays and Lloyds, as well as other digital challengers.
The Prudential Regulation Authority's cautious approach, extending Revolut's mobilization phase beyond 18 months, reflects concerns over risk controls and compliance, ensuring full accountability, capital requirements, and stricter governance for the newly authorized bank.
