Revolut receives UK banking license as neobanks compete with established banks

Revolut has finally received a UK banking license, further increasing the threat posed by neobanks to traditional finance.

The breakthrough ends a painful wait for Europe's most valuable fintech company, which first applied for a license in January 2021.

Regulators were reportedly concerned about Revolut's accounts, but politicians were vocal in their support, with Jeremy Hunt, the former Chancellor of the Exchequer, calling the company a “shining example from our world-leading fintech sector.”

The new license will allow Revolut to further bring this sector into the mainstream financial sector. But first, the company must complete a “mobilization phase” designed to test systems before full launch. According to the Bank of England, this phase can last “as little as a few months” and “as long as 12 months.”

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Once mobilization is complete, full rights will be granted. Revolut will then be able to offer overdrafts, loans and savings products – just like traditional banks. The company's 9 million UK customers will also receive protection for deposits of up to £85,000.

Nik Storonsky, CEO of Revolut, described the license as an “important milestone in the journey” of his company.

“We will ensure that Revolut becomes the bank of choice for British customers,” he said.

The license also gives British neobanks more legitimacy. With a valuation of $33 billion, Revolut is already worth as much as many traditional banking giants. The disruptor is now reportedly on the verge of a new valuation of $45 billion, which would put it above Barclays and NatWest.

Despite these shocking figures, competing neobanks have been quicker to obtain a UK banking license, with companies such as Monzo, Starling and Atom receiving approval years ago.

By joining forces with these challengers, Revolut can accelerate its push into mainstream finance. The UK banking establishment is undergoing a restructuring.