Revolut CEO Nik Storonsky blamed recent banking turmoil for the latest referrals to the long-awaited fintech banking license in the UK, arguing that the cause of the blockade “isn’t really us”.
Revolution has been locked in discussions with the Financial Conduct Authority and the Prudential Regulation Authority over a UK banking license for more than two years, much longer than the typical delivery time of less than a year.
Since the application was filed in January 2021, Revolut has lost many of the senior executives on its UK banking team. Regulators have also carried out a review of fintech culturewhich executives say has been improved.
Revolut Chief Financial Officer Mikko Salovaara said a UK license is on the way”any day from today” on March 1.
The fintech sees a UK license as crucial to its hopes of offering loans and other services to the more than 5.8 million customers it already has in the UK. It would also act as a seal of approval to help secure other banking licenses in key markets.
“At the end of the day it’s not really us, it’s generally the banking crisis that we see at the moment that is making regulators more cautious,” Storonsky told the Financial Times of the block on UK license approval.
The FCA and PRA both declined to comment. The operations teams working on Revolut’s license application are not the same officials who were overseeing the UK regulatory work on Credit Suisse and Silicon Valley Bank – two of the biggest victims of a banking crisis that continues unabated – although there is some overlap at the top level.
Two people familiar with the licensing process in the UK said the recent turmoil “would have had no impact” on Revolut’s application.
Regulators in the UK questioned Revolut bosses the qualification on their postponed 2021 accounts, which warned there was a risk that the revenues were “materially incorrect,” a person with knowledge of the situation told the FT. Separately, the FCA ordered an independent review of Revolut’s policies to prevent and detect financial crimes in 2020, under a process known as section 166.
Fees from cryptocurrency trading were Revolut’s main source of revenue in 2021, accounting for around a third of the reported £636m. Other streams include premium card subscription services and lending products in Europe such as a buy now, pay later service.
The FCA has been criticized for being slow to process the licenses and other permit applications submitted to it in general.
In a recent interview with the FT, FCA chief executive Nikhil Rathi did not comment on Revolut’s case, but said most of the delays in its license applications were due to genuine regulatory concerns and said the regulator would be “much more forthright and public in saying that in the future”.
Movement on Revolut’s banking license appears to have slowed, or all but stopped, according to two people familiar with the approval process. Meanwhile, the lack of a license prevents Revolut from fully competing in the US, Canada or Australia, because regulators are watching UK decision-making.
Revolut said it would not comment on licensing applications or its regulatory reports.
“If you’re a company and you want to build something, uncertainty is one thing that kills you because you don’t know what you can do, what you can’t do,” Storonsky added.
Two people familiar with the company said they had considered leaving the UK, in what would deal a major blow to the UK’s fintech sector and run counter to Prime Minister Rishi Sunak’s goals to become a global technology hub.
The company said in a statement: “We are a British company and London is our home.”
When asked about the government’s aspirations to encourage innovation and investment, Storonsky said: “The reality is quite different.”
—————————————————-
Source link