Source : financemagnates, Thursday, 25/7/2024
Revolt, the largest fintech company by value, has obtained a banking license in its home country, United Kingdom. However, the license is currently in the “packing” stage, which is also referred to as “licensing with restrictions””.
The London-based fintech firm noted that many new banks, including rivals such as Monzo, Starling, Atombank, Zoba Bank, JP Bank and Crowe, went through a similar “mobilization” phase..
Optional path“
According to the Bank of England’s “New Bank Authorization Process” guide, “the mobilization path is optional”.
Mobilization should not be seen as the stage at which a company starts its strategies, processes and systems for building banks, but rather as a path that allows new banks additional time to complete and implement the development of their banks, i.e. IT infrastructure, governance, and risk management frameworks, while benefiting from licensing,” the guide explained..
Since mobilization aims to complete the bank’s construction, we do not expect companies to make substantial changes to their strategy or personnel during mobilization.
In the case of packing, one of the main restrictions imposed on the recipient of a bank license is the annual deposit limit of £50,000 by customers. Revolut will bypass these restrictions by continuing to provide services to residents of the United Kingdom under the FCA’s current EFI license..
12-month deadline
The Bank of England confirmed in its guide that the mobilization phase must be completed within 12 months. Furthermore, the Prudential Regulatory Authority and the Financial Conduct Authority have set a list of top-up conditions for new bank license holders entering the mobilization status to exit this stage..
The guide added: “The request to amend the permission for banks to exit the packing must be submitted at least three months before the end of the 12-month mobilization period to allow sufficient time for regulatory assessment.”.
During the mobilization period, holders of new banking licenses also tried to secure more investments. Although Revolut has not announced any plans to raise funds, it is considering a secondary share sale to its employees’ shareholders, with a valuation of $45 billion. Fintech CEO Nick Storonsky is also reportedly going to get rid of a large chunk of his stake in the company..
New products coming to Revolut customers
United Kingdom is Revolt’s largest market, with 9 million customers compared to 45 million global customers. It has been operating as a payment institution in United Kingdom since its inception in 2015. However, it operates as a bank licensed from Lithuania in the European Union. It also obtained a banking license in Mexico earlier this year..
As a bank in United Kingdom, Revolut can now offer lending products, which it could not offer as a payment institution. Furthermore, when Revolut starts operating as a bank in United Kingdom, each customer’s deposits up to £85,000 will be protected under the Financial Services Compensation Scheme (FSCS).
Meanwhile, Revolut has focused on expanding services beyond United Kingdom as well. Recently, it partnered with CMC Markets to offer CFD products to its clients. However, it has terminated services under the “Lite” brand in several emerging markets.