Revolut is set to become even more popular in the UK with imminent bank license approval
Aiming to expand its financial offerings to include UK current accounts, London-based Revolut has applied for a UK banking license.
Founded in 2015, Revolut has gone from strength-to-strength as a challenger bank. A UK banking license would allow Revolut to compete more directly with other challengers, including Monzo and Starling, and with traditional banks.
Though Revolut has offered current accounts for some time, with an EU banking license since 2018, their next step could see the bank making greater improvements for its customers. Of particular benefit would be the fact that UK current accounts are covered by the Financial Services Compensation Scheme. With FSCS protection, up to £85,000 of each customer’s deposits would be protected if Revolut went bust.
Revolut’s unique selling points, driving it to profitability, have been foreign currency transfers, cryptocurrency trading and EUR and GBP accounts. So far, all of this has been done with a pre-paid debit card for UK account holders. With a UK banking license, Revolut could also offer deposit accounts complete with overdrafts, and loans.
Revolut’s founder, Nikolay Storonsky, created the bank to address the issues of high foreign transaction fees and exchange rate commissions. His main focus was on creating a multi-currency card. Now, Storonsky believes that a UK license is the next step:
“A UK banking licence allows us to provide the essential financial products UK customers expect from their everyday primary bank account, such as loans, credit cards, overdrafts and deposit accounts, coupled with the additional trust and security that is offered through FSCS protection.”
Revolut was rumoured to be applying for a UK license back in March 2020, though the COVID-19 pandemic slowed progress. Storonsky claims that the UK license could encourage existing customers, and new, to begin using their Revolut accounts as a place to deposit their salary. This could increase deposits dramatically. By Storonsky’s own estimate, deposits could be increased ‘by 50%’.
It can take up to two years for a UK banking license to be approved. In the meantime, Revolut can continue to offer all its usual services. Customers will continue to be served on an e-money license, as they always have in the UK, until the banking license is approved. Whilst this might not feel entirely secure during Brexit adjustments, each customer’s money is ring-fenced by EEA banks to offer some peace of mind.
Successful approval for a banking license should not take away from Revolut’s existing financial offerings. Customers will still be able to spend in more than 140 currencies, as well as exchanging in-app using interbank rates. New customers will find that it’s still just as easy to set up an account with their smartphone, with Revolut offering four ‘Plans’ ranging from the free basic account to the Metal account at £12.99 per month.
Today, even in advance of receiving its full UK banking license, Revolut has over 13 million customers worldwide. Customers are served by more than 2,000 employees, primarily based in major cities all around the world.