UK neobank Revolut has received its European banking license from the Bank of Lithuania. This allows Revolut to move from offering a prepaid card service to launching current accounts, business and consumer loans, and overdrafts across EU countries, starting early next year.
It will initially roll out the new services in Lithuania, where it has 150,000 customers, before expanding them to its larger markets, such as the UK, France, and Poland. This will enable the neobank to test the new products on a smaller scale before committing to a full launch to all of its 3 million users.
The company is also taking steps to ensure it remains regulated in the UK post-Brexit.Depending on the outcome of the Brexit negotiations, the neobank might not be able to “passport” its European banking license to the UK after the country departs from the bloc.
As a result, Revolut is preparing to apply for a UK banking license separately, according to The Financial Times. It currently operates in the UK with an e-money license, which has allowed it to passport its services across the continent while the country remains in the EU. It seems that Revolut has by now covered all of its bases, and will likely be fully regulated across Europe, no matter how the political situation turns out in the future.
It took Revolut a lot longer to apply for and receive a banking license than its competitors. Local rivals Monzo and Starling, as well as Germany’s N26, received their banking licenses in their respective markets much sooner than Revolut, allowing them to bring services such as loans and overdrafts to market quicker.
Hence, Revolut’s new services will face a lot of competition in the market. However, the startup plans to differentiate itself by also offering different products, including stock trading, per the FT. Fifty-one percent of consumers trust a fintech more when it is regulated.
As such, getting regulated may help Revolut to build more user confidence, as deposits of up to €100,000 ($113,790) are protected under the European Deposit Insurance Scheme.