London-based fintech Revolut has announced today that it is applying for a European banking license in order to become the first global banking app.
The startup has also begun building its own in-house payment processor to improve the reliability and service of the challenger bank.
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Launched in 2015, Revolut has raised $90m from investors including Index Ventures and Ribbit Capital. It now has over 900,000 users across Europe, who can spend abroad in over 120 currencies with no fees.
In addition, the bank launched business accounts earlier this year and now counts 16,000 businesses amongst its customer base.
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Revolut says it expects its banking licence to be in place in the first half of 2018. The license will allow it to offer deposit and credit services in selected markets, including overdrafts and personal loans. This is an upgrade on the prepaid current account customers can access right now.
As well, the licence means it will enable Revolut to protect customer funds up to €100,000 under the European Deposit Protection Scheme. At the moment, because the bank is only under an E-money license, it means it can’t offer these protections to customers.
Revolut’s founder and chief executive, Nikolay Storonsky, said:
“We delayed applying for a banking licence because we wanted to focus all of our resources on product innovation from day one. 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.
“We’re building out a mobile-first, global financial platform to serve the needs of our unique international customers for the 21st century.”
The startup says it decided to go for a European banking licence via the European Central Bank instead of the UK’s Financial Conduct Authority, as it wants to be able to offer services to its customers across the continent, not just in the UK.
Before it receives its shiny banking license however, Revolut also has its sights set on dominating in the US. The startup’s head of communications, Chad West, told Verdict
“There’s a lack of real, innovative fintech players founding over there. For a British-based company to go into the states and kick off big time, it’s going to be quite good.”
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Revolut’s news comes the day after its rival Monzo announced a new fundraising round of $93m. Monzo now has nearly 500,000 customers and is currently rolling out its new full current account after receiving a banking licence earlier this year.
In the first half of this year, fintech startups in the UK pulled in $564m in venture capital, showing that the sector has no signs of slowing down.