Saturday 20 October 2018

Fintech Revolut applies for EU banking licence to fuel expansion

Revolut intends to build its own payment processor in-house and expects the banking licence to be in place by 2018. Stock image
Revolut intends to build its own payment processor in-house and expects the banking licence to be in place by 2018. Stock image
Louise Kelly

Louise Kelly

A financial technology startup that has grown rapidly thanks to its offering of app-based banking products has applied for a European Banking Licence.

Revolut, which boasts 50,000 Irish users, intends to build its own payment processor in-house and expects the banking licence to be in place by 2018.

The licence will allow the traditional bank alternative to offer deposit and credit services across Europe, including overdrafts, personal loans and term deposits.

The decision to bring processes in-house follows a series of complaints by users on social media recently, who said their cards had been declined or their payments had been rejected.

The London-based fintech, whose founder and CEO Nikolay Storonsky spoke at the Web Summit yesterday, blamed the issue on "a third-party processor".

"We delayed applying for a banking licence because we wanted to focus all of our resources on product innovation from day one," said Storonsky.

"Even without a banking licence, we have attracted over 950,000 users across Europe, many of whom consider Revolut as their primary current account and spending card."

Founded in 2015 by Mr Storonsky and Vlad Yatsenko, Revolut offers a pre-paid card linked to an app that lets people buy, hold, and transfer money in multiple currencies at low rates.

In the last few weeks, the company launched its initial insurance offering, mobile phone cover, which began the fintech's initial expansion into insurance as part of its ambition to become "the first global banking app".

The banking licence will also offer Revolut's 950,000 global users extra reassurance as it would protect customers' funds up to €100,000 under the European Deposit Protection Scheme.

Potential disruptors to traditional banks are seeking to elbow their way into a rapidly changing market, which also faces disruption caused by Brexit.

Yesterday, ECB head of supervision Daniele Nouy said licence applications from about 20 banks are in some stage of assessment by supervisors on the continent.

"Maybe they have not signed the formal requirement," she said, but they have made a "pretty comprehensive application that can be turned into a formal one very, very fast".

About 50 banks have discussed their Brexit business-relocation plans with authorities in the European Union, she said.

International banks are working on plans to shift workers from the UK to the Continent after Brexit to maintain access to the single market. UBS Group CEO Sergio Ermotti has said it will start the process of moving London-based employees to expanded offices inside the EU early next year.

Frankfurt, has emerged as a destination of choice for the biggest banks.

JPMorgan Chase, Citigroup and Deutsche Bank are all scouting the market there for offices. Goldman Sachs has already signed leases for offices that it won't move into until 2019. (Additional reporting Bloomberg)

Irish Independent

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