Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
Amid financial scrutiny, UK fintech giant Revolut faces rejection for its long-running banking license application.
Revolut is facing a possible rejection of its UK banking license application submitted to the Bank of England (BoE). The British neobank’s long-standing application for a UK banking license appears to be in jeopardy and could cause a big blow to the company’s operational growth plans. Revolut has been campaigning for a license for two years, with high-ranking executives recently confident about approval this year. Although the BoE declined to comment on the rejection reports, some believe Revolut’s financial shape could have been a factor. The leading fintech’s finances have been scrutinized this year after its auditor doubted 2021 revenue figures.
The Telegraph, citing inside sources, reported that the Prudential Regulation Authority (PRA) demanded certain obligations from Revolut in view of license approval. Obligations include producing accounts with unqualified audit opinions and simplifying their share structure. In March, the PRA, the BoE’s licensing arm, had also revealed to the government, plans to issue a statutory warning.
However, the PRA has yet to serve Revolut with the license more than seven weeks after the announcement. Meanwhile, some reports say Revolut is in urgent talks behind the scenes to salvage its license application.
Failure to Secure UK License Would Not Impact Existing Revolut Services but Could Hurt the Bottom Line
Although missing out on a UK license would not impact Revolut’s existing services, the neobank would be unable to offer more traditional services. Services off-limits include offering mortgages and loans to customers in the UK that could potentially drive up Revolut’s bottom line.
Revolut has yet to comment on the BoE’s move, with a spokesperson explaining the company does not address ongoing licensing applications. Despite some reports suggesting the London-based neobank might throw in the towel, others claim Revolut could continue pursuing a UK license.
Earlier this month, Revolut CEO Nikolay Storonsky said the license issuance delay was due to the effects of the ongoing US banking crisis. According to the chief executive, the Silicon Valley Bank-triggered financial meltdown spooked regulators and increased paranoia in the industry.
Revolut is a financial “super app” that launched in 2015 and offers a wide range of services to customers. These include current accounts, payments, digital currency trading, and overseas spending.
Founded by Storonsky and Vlad Yatsenko, the fintech has become one of the most valuable of its kind in the world. In addition, Revolut leveraged an aggressive global expansive scheme to become Britain’s most valuable tech start-up.
The explosive popularity of digital currencies in the last few years also precipitated Revolut’s initial success. In 2021, crypto trading accounted for a third of the London-based neobank’s revenue. However, the bear phase that characterized much of last year saw crypto trading sink to less than 10% of Revolut’s revenue.
Amid its licensing blues, Revolut has sustained numerous other challenges, including the recent exit of CFO Mikko Salovaara. Salovaara quit the company in early May for personal reasons over two years after joining in January 2021. His entry into Revolut coincided with the company’s submission of its license application.