Revolut’s Size Draws Regulatory Attention in UK Banking License Process

Revolut continues to navigate the complexities of obtaining a banking license in the United Kingdom.

The digital banking services provider has encountered various challenges and delays in its regulatory journey, but remains committed to close collaboration with regulators and maintains hope for eventual license approval, the Financial Times (FT) reported Saturday (Oct. 21).

Revolut initially applied for the license in January 2021, but has since encountered numerous obstacles, according to the report.

One significant challenge has been its size, boasting nearly 8 million customers in the U.K., the report said. This has drawn the attention of regulators who seek to ensure the robustness and compliance of Revolut’s operations compared to other newly licensed lenders.

Financial reporting has also come under scrutiny for Revolut, per the report. The company has experienced delays in finalizing its accounts for both 2021 and 2022, raising concerns among regulators. Regulators have expressed worries about the company downplaying the issues surrounding its financial reporting.

When the company was granted permission to delay filing its 2022 accounts in September, a Revolut spokesperson told PYMNTS: “We look forward to announcing our 2022 audit and annual report in due course. We continue to be pleased with the growth of the business, new products, higher user numbers and volumes, and increased financial metrics that result.”

The departure of several senior executives has further impacted Revolut’s regulatory journey, as regulators prefer stable management teams, according to the report. To address these concerns, the Prudential Regulation Authority (PRA) has requested that Revolut expand its board to include directors with more technology and banking expertise. Consequently, the company is in the process of adding two non-executive directors to meet this requirement.

External factors have also influenced Revolut’s pursuit of a U.K. banking license, the report said. Banking turmoil, including the collapse of several banks in March, has made regulators more cautious, while the current economic climate raises concerns about FinTech companies’ ability to raise capital if needed. These factors have contributed to a more stringent approach from regulators during the application process.

Revolut CEO Nik Storonsky told the FT in May: “Ultimately, it is not really us, it is generally the banking crisis we see at the moment that makes regulators extra cautious.”

Despite the challenges and delays, Revolut maintains an optimistic outlook regarding its chances of obtaining a U.K. banking license, per the report. The company highlights its collaboration with regulators and its successful track record of obtaining banking licenses in other jurisdictions. Revolut has already secured over 70 licenses across various financial services and was granted an EU banking license by the Bank of Lithuania in 2021.

An earlier version of this report incorrectly referred to Revolut developing its own in-house accounting package. In fact, the company uses a third-party package, supplemented by in-house software.