Revolut, the U.K. digital bank, announced Thursday (Dec. 13) that it received approval for a banking license in Europe by the European Central Bank.
In a blog post, the company, calling it a “huge milestone” said the license will help Revolut meet its goal of building an account that people can use to manage all aspects of their finances. While Revolut said the license is a big step for the company, it noted that Revolut isn’t automatically turning into a bank right away with the license. Rather it said that in the next few months it will engage in building and testing and working with regulators to remove any restrictions on its license so it can roll out full accounts, overdrafts and all the other services that banks can offer. Revolut noted that any funds deposited into a Revolut Bank account in the future will be protected up to €100,000 under the European Deposit Insurance Scheme (EDIS). “It’s worth pointing out that this scheme is not currently in place, so your current funds with Revolut remain safeguarded in accounts with a tier one UK bank, as per our obligations under the e-money regulations,” Revolut said in the blog post.
According to the digital bank, once the company is operating with its banking license users will be able to get personal loans and access overdraft, removing the pain and costs of dealing with negative balances. Revolut said the personal loans it plans to offer customers will help when a budget can’t cover purchases or when they need a small cash injection prior to the next payday.
“We’ll start by testing the new licence in Lithuania next year and once we’re happy that everything is running smoothly, we’ll look to expand into other European markets later in the year,” Revolut said in the blog. “We’ll aim to implement the banking licence as transparently as possible, so that you can track our progress and find the answers to your questions. “