Revolut’s CEO says recent bank turmoil has held up his company’s U.K. banking license.
“Ultimately, it is not really us, it is generally the banking crisis we see at the moment that makes regulators extra cautious,” Nik Storonsky said in a Financial Times (FT) interview on Sunday (May 7).
As the report noted, Revolut’s discussions with two British regulators — the Financial Conduct Authority and Prudential Regulation Authority — about a U.K. banking license have stretched out for more than two years, much longer than the typical turnaround time for a license, which the FT says is under a year.
It also cites comments from a pair of sources familiar with the license approval process that says movement on Revolut’s license appears to have slowed or virtually stopped.
And as PYMNTS wrote in 2022, the company was under pressure to improve its internal financial reporting controls after the U.K.’s Financial Reporting Council found the FinTech’s audits were flawed and had a high risk of “misstatement.”
March brought reports that Revolut’s board had criticized its response to an audit of its book. In February, the company announced that an opinion by auditors “confirmed that ‘the financial statements give a true and fair view’” of its operations. However, the auditor had actually warned that revenues could be “materially misstated.”
Receiving a banking license in Great Britain could boost Revolut’s profitability as higher interest rates make deposits more valuable while also helping pave the way for the platform to receive licenses in other markets.
However — as research by PYMNTS has shown — neobanks can sometimes face an uphill battle. Less than 10% of consumers use FinTechs as their primary bank account, and traditional banks still enjoy a large place in the market for more profitable services such as mortgages and consumer lending.
Among the consumers who have chosen to use neobanks, research by PYMNTS and Ingo Money has found that convenience is the thing they value the most, a factor cited by 55% of the people surveyed. Speed was a close second, cited by 54% of consumers.
Nineteen percent of consumers mentioned security as their key factor. Still, for consumers that don’t want to use neobanks and prefer traditional banks, security was the reason they’ve chosen to avoid digital-only operations, mentioned by 39% of those surveyed.
“Speed is nice, convenience, too,” PYMNTS wrote recently. “But as we saw in the bank runs that have bedeviled the sector in the few short weeks since Silicon Valley Bank collapsed, there may be something to be said for having physical branches, a human presence, and some reassurance in the mix during hectic times.”