UK Fintech Startup Revolut Gets EU Banking License in Lithuania

By | December 13, 2018

Revolut, the London-based financial technology startup, has obtained a European banking license as Brexit looms, with plans to launch checking and savings accounts as well as retail and business lending.

The Bank of Lithuania, the eastern European country’s central bank, granted Revolut the regulatory approval that gives it permission to operate throughout the European Union.

While London has been a hotbed for financial technology startups, Brexit has driven many of these firms to seek licenses from other European jurisdictions. Once the U.K. leaves the E.U. British financial companies will no longer have the right to “passport” their regulatory approvals to other European jurisdictions.

Revolut, the first London-based fintech to receive a European banking license, joins a growing number of firms that have secured permission to offer banking accounts and loans. Others include Swedish payments company Klarna Holding AB and Dutch payments firm Adyen NV as well as German startup N26.

Chad West, a Revolut spokesman, said the company chose Lithuania because it has 150,000 customers there already — or about 7 percent of the 2.25 million customers it said it had in July 2018 — and the nation’s “regulatory environment is incredibly fintech friendly.” West also said it was faster to get licensed in Lithuania than many other European jurisdictions.

Founded in 2015, Revolut has grown from a company that offered consumers a no-fee pre-paid debit card to use while traveling internationally to one that allows consumers to access services such as foreign currency exchanges, budgeting tools, as well as cryptocurrency wallet and exchange.

The company said it would target U.K., France and Poland and look to passport its Lithuanian banking license to other jurisdictions.

The company has Luxembourg e-money license, which allows it to offer a much more limited set of products, and has previously said it will offer commission-free equity trading in the U.K. and Europe within the next year.

“Our vision is that retail and business customers will be able to apply for a loan in just two minutes from within the app, and then have the money in their account almost instantly,” said Nikolay Storonsky, the former Credit Suisse investment banker who is Revolut’s founder and chief executive officer.

Revolut has raised about $340 million in total from venture capital firms that include Index Ventures, Ribbit Capital, Balderton Capital and DST Global. It was last valued at about $1.7 billion when it raised $250 million in April 2018. The company has said it plans to expand beyond Europe in 2019, including the U.S., and Japan.

The company, which said in February that it had broken even on a monthly basis after incurring losses previously, processes about $4 billion of transactions each month and was seeing between 8,000 and 10,000 new accounts being opened each day.

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