Fintech giant Revolut has finally obtained its long-awaited UK banking license, marking a significant turning point for the London-based company after a protracted three-year application process.

Revolut Finally Wins Regulatory Nod for UK Banking

The Prudential Regulation Authority (PRA) granted the license with restrictions, a common practice for new entrants to the UK banking sector. This status allows Revolut to build out its banking operations before a full-scale launch gradually.

“We are incredibly proud to reach this important milestone in the journey of the company,” commented Revolut's CEO and Co-Founder, Nik Storonsky. “We will ensure we deliver on making Revolut the bank of choice for UK customers.”

The license approval comes after Revolut addressed several regulatory hurdles, including concerns about its financial reporting. The company recently received an unqualified audit opinion from the UK’s accountancy advice firm BDO, resolving previous issues related to revenue recognition and IT systems.

With the UK license secured, Revolut can now expand its product offerings in its largest market. The company boasts approximately 9 million customers in the UK and over 45 million globally. This development complements Revolut's existing European banking license, obtained from Lithuanian authorities in 2021.

In preparation for obtaining a license, the company has relocated its headquarters to the central financial district of London, taking advantage of the trend of major banks leaving the area. The fintech giant established its new headquarters in the YY London building located in Canary Wharf.

Valuation of $45 Billion

Industry analysts view this as a significant boost for Revolut's growth strategy. The company reported strong financial results for 2023, with pre-tax profits soaring to £344 million, a substantial increase from £6 million in the previous year. Revenues nearly doubled to £1.8 billion, buoyed by rising interest rates and growth in customer subscriptions. Revenues are expected to be even higher in the future, as the company plans to generate $370 million from advertisements alone by 2026.

“In 2023, we took our biggest steps yet on that journey. We accelerated customer growth and increased the adoption of our products across the board, driving a record year for Revolut financially,” Storonsky commented.

Revolut's workforce has also expanded rapidly, contrary to the broader tech industry trend of layoffs. The company added over 2,000 employees in 2023, bringing its total headcount to more than 8,000.

As Revolut enters the “mobilization” phase of its UK banking operations, it faces an initial restriction of holding no more than £50,000 in total customer deposits. This phase typically lasts up to 12 months, during which the company will work closely with regulators to ensure compliance with all banking standards.

The license approval coincides with reports of Revolut nearing a deal to sell $500 million worth of employee shares, potentially valuing the company at $45 billion. If realized, this would cement Revolut's position as one of the world's most valuable fintechs. This information has not yet been officially confirmed; however, according to people familiar with the matter, it is a sign that investors are increasingly hopeful about the fintech sector. The Wall Street Journal also speculates the move could open a door for an initial public offering (IPO).