Revolut Becomes a UK Bank, but What Does a 'Mobilisation' Stage Mean?

Revolut, the largest fintech by valuation, has received a banking licence in its home country, the United Kingdom. However, the licence is currently in the ‘mobilisation’ stage, also referred to as ‘Authorisation with Restrictions’.

The London-headquartered fintech pointed out that many new banks, including challenger banks like Monzo, Starling, Atom Bank, Zopa Bank, GB Bank, and Kroo, have gone through a similar ‘mobilisation’ stage.

An ‘Optional’ Route

According to the Bank of England’s ‘new bank authorisation process’ guide, the “mobilisation route is optional.”

“Mobilisation should not be seen as the stage to commence a firm’s bank-building strategies, processes, and systems, but rather a route which allows new banks extra time to finalise and deliver the development of their banks, i.e., IT infrastructure, governance, and risk management frameworks, with the benefit of being authorised,” the guide explained.

“As mobilisation is intended to complete the build-out of the bank, we do not expect firms to make material changes to their strategy or individuals during mobilisation.”

When in the mobilisation state, one of the major restrictions on the banking licence recipient is the £50,000 annual deposit limit by customers. Revolut will circumvent these restrictions by continuing to offer services to UK residents under the existing e-money institution licence authorised by the Financial Conduct Authority.

My thoughts on @RevolutApp finally getting its UK banking licence.

It's UK Banking license will allow it to offer overdrafts, loans, and savings products to its more than 9m UK consumers.

🧠 This is a huge moment for Revolut and UK Fintech. Revolut has talked a big game on the…

— Simon Taylor (@sytaylor) July 25, 2024

A 12-Month Deadline

The Bank of England, in its guide, further highlighted that the mobilisation stage must be ended within 12 months. Further, the PRA and FCA set a list of mobilisation conditions for new banking licence holders entering mobilisation state for this exit from the stage.

“A Variation of Permission application for banks to exit mobilisation shall be required to be made at least three months prior to the expiration of the 12-month mobilisation period to allow sufficient time for the regulatory assessment,” the guide added.

During the mobilisation period, the new banking licence holders also attempted to secure further investments. Although Revolut did not publicise any fundraising plans, it is considering a secondary share sale round for its employee shareholders, aiming at a valuation of $45 billion. The fintech’s CEO, Nik Storonsky, will also reportedly offload a significant chunk of his stake in the company.

Prior to recent news of a $545M profit, and that it was seeking an updated, $40bn valuation, Revolut added a number of new features to its app.

Here is how these features compare to competitors:

Source: FXC Intelligence pic.twitter.com/mNuMVuoojz

— Marcel van Oost (@oost_marcel) July 3, 2024

New Products Are Coming for Revolut Customers

The UK is the largest market for Revolut, with 9 million customers compared to the global 45 million customers. It has been operating as a payment institution in the UK since its establishment in 2015. However, it operates as a bank with a licence from Lithuania in the European Union. It also obtained a banking license in Mexico earlier this year.

As a bank in the UK, Revolut can now offer lending products, which it could not as a payment institution. Further, when Revolut starts operating as a bank in the UK, each customer’s deposits will be protected up to £85,000 under the Financial Services Compensation Scheme (FSCS).

Meanwhile, Revolut has been focused on expanding services outside the UK as well. Recently, it partnered with CMC Markets to offer contracts for differences (CFDs) products to its customers. However, it has terminated services under the “Lite” brand in many emerging markets.