UK is delaying Revolut’s banking license over risk management concerns

Revolut, the U.K.-based fintech, is encountering significant challenges in its quest to secure a full banking license in its home market. The Bank of England has placed the application on hold due to concerns regarding the startup's ability to uphold effective risk management controls amid its rapid global expansion. The central bank is urging Revolut to strengthen its risk management framework to align with its international growth before granting approval for a full banking license. Concurrently, the Prudential Regulation Authority is conducting an investigation into the company's risk management practices both in the U.K. and overseas, as reported by the Financial Times. Although Revolut received initial approval for a banking license over a year ago, it remains in the “mobilization” stage, which can last up to 12 months. During this phase, the company faces restrictions on customer deposits while it finalizes its setup and undergoes assessments by the Prudential Regulation Authority and Financial Conduct Authority. The successful attainment of a full banking license would empower Revolut to begin lending operations in the U.K. and manage customer deposits exceeding £50,000. Currently, the company serves around 12 million customers within the U.K. This news arrives as Revolut, which boasts over 65 million customers globally, is aggressively expanding beyond British borders. The company already holds a banking license in the European Union and operates in various countries including Australia, Japan, New Zealand, Singapore, Brazil, and the U.S. Recently, it also launched services in India and plans to enter Colombia by 2026, along with ambitions to expand into Argentina, Mexico, and Africa, starting with South Africa. With aspirations to reach 100 million customers by mid-2027 and to enter over 30 new markets by 2030, Revolut is committed to navigating this complex mobilization process. A spokesperson emphasized that they are making progress and collaborating closely with the PRA, stating, “This is the largest and most complex mobilization ever undertaken in the U.K., and ensuring thoroughness is crucial.” In its latest annual report, Revolut announced a net profit of $1 billion (£790 million) for 2024, alongside a remarkable 72% increase in revenues, totaling $4 billion (£3.1 billion). Additionally, the company launched a cryptocurrency exchange, Revolut X, part of its Wealth division, which saw a staggering revenue increase of 298% from $158 million in 2023 to $647 million in 2024.