Amid financial scrutiny, UK fintech giant Revolut faces rejection of its longstanding banking license application.
Revolut facing potential rejection from its UK banking license application submitted to the Bank of England (BoE). The British bank’s long-running new application for a UK banking license appears to be in jeopardy and could deal a major blow to the company’s operational growth plans. Revolut has been campaigning for a two-year license, with high-level executives recently confident about approval this year. Although the Bank of England declined to comment on reports of the rejection, some believe Revolut’s financial shape could have been a factor. The leading financial technology company has been scrutinized this year after its auditor questioned its 2021 revenue numbers.
The Telegraph reported, citing inside sources, that the Prudential Regulatory Authority (PRA) has requested certain commitments from Revolut in light of the license approval. Commitments include creating accounts with unqualified audit opinions and streamlining their stake structure. In March, the PRA, the licensing arm of the Bank of England, also revealed to the government, plans to issue a legal warning.
However, the PRA has yet to serve Revolut more than seven weeks after the announcement. Meanwhile, some reports indicate that Revolut is in urgent talks behind the scenes to salvage its license application.
Failure to secure a UK license will not affect existing Revolution services but could damage the base line
Although the lack of a UK license will not affect Revolut’s existing services, the new bank will not be able to offer more traditional services. Prohibited services include providing mortgages and loans to customers in the United Kingdom that could potentially increase Revolut’s profits.
Revolut has yet to comment on the BOE’s move, with a spokesperson clarifying that the company is not handling ongoing license applications. Despite some reports that the new London bank may be throwing in the towel, others claim that Revolut may continue to seek a UK license.
Earlier this month, Revolut CEO Nikolai Storonsky said that the delay in issuing the license was due to the effects of the current US banking crisis. According to the CEO, the financial meltdown triggered by the Silicon Valley bank has spooked regulators and added to industry paranoia.
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Revolut is a “premium financial app” launched in 2015 that offers a wide range of services to clients. These include checking accounts, payments, cryptocurrency trading and spending abroad.
Founded by Storonsky and Vlad Yatsenko, fintech has become one of the most valuable financial technologies of its kind in the world. In addition, Revolut benefited from a massive global scheme to become Britain’s most valuable tech startup.
The massive popularity of cryptocurrencies in the past few years has also led to Revolut’s initial success. In 2021, cryptocurrency trading accounted for a third of the revenue of the new bank in London. However, the bear phase that marked most of the past year saw cryptocurrency trading drop below 10% of Revolut’s revenue.
Amid the licensing blues, Revolut has faced several other challenges, including the recent exit of Chief Financial Officer Mikko Salofara. Salovaara left the company in early May for personal reasons after more than two years joining in January 2021. His entry into Revolut coincided with the company submitting its license application.
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Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify cryptocurrency stories down to the bare essentials so that anyone anywhere can understand without much background knowledge. When he’s not deep into cryptocurrency stories, Tolo enjoys music, loves to sing, and is a movie lover.
