Industry Disrupted? Revolut Just Became A “Real Bank”, And Traditional Bankers Have A Lot To Say

On Mon, Oct 16, 2023, Revolut received a full UK banking license from the Prudential Regulation Authority, part of the Bank of England. This development allows Revolut to operate as a fully licensed bank in the UK, moving beyond its previous status as an electronic money institution.

With the full banking license, Revolut can now offer fully protected deposit accounts and expand into lending services. Customers' deposits held at Revolut's UK bank will be covered under the country's deposit protection system, providing enhanced security similar to traditional banks.

Revolut initially applied for the UK banking license in 2021. The approval process involved rigorous scrutiny of the company's internal systems, governance, and risk management structures. The company was first granted a restricted license in 2024, entering a "mobilisation phase" to demonstrate compliance with full banking requirements. The extended review period ensured Revolut's operational and regulatory capabilities were sufficiently robust for a fully licensed bank.

The acquisition of the banking license positions Revolut as a significant competitor to traditional banks. Its digital-only operation allows for flexibility and innovation, potentially increasing competitive pressure on legacy banks to enhance their digital offerings. Revolut's established user base in the UK and globally provides a strong foundation for expanding its range of banking services.

This development marks a shift within the fintech industry, where companies are increasingly integrating into the traditional banking system by obtaining full banking licenses. This trend indicates a blurring of lines between fintech firms and conventional banks, with digital platforms like Revolut becoming integral parts of the financial ecosystem.

Based on reporting by techround.co.uk.