Revolut had received its full UK banking licence. What’s the take away for other firms?

UK financial services firm and Europe’s most valuable start-up, Revolut, has received regulatory approval to launch a British bank after a five-year wait – allowing it to compete with high-street banks in areas such as current accounts and consumer lending.

Senior Solicitor in Harper James’ financial services team, Charles Rogers, says the decision is a major moment for both Revolut and the wider fintech market:

“Revolut securing its full UK banking licence is a genuine landmark, both for the business itself and for the wider fintech sector. From a regulatory perspective, its importance lies in what it says about the standards firms are expected to meet. It shows that regulators are prepared to support innovation, but only where governance, reporting and risk management are strong enough to withstand the demands of a full banking environment.

“It also highlights that authorisation is not a single moment of approval, but a detailed and often demanding process. Moving from a restricted licence to full banking status can be a lengthy and evidence-heavy journey, particularly for fast-growing businesses operating under close supervisory scrutiny.

“We’re seeing a high frequency of newly authorised credit and payments firms we work with being asked by the FCA to accept a time-limited requirement on their permissions as part of the approval process, often with restrictions on operating a network of appointed reps or PSD agents. This suggests the regulator is wary of new market entrants taking on responsibility for too wide-reaching oversight of unregulated entities at the outset.

“For other firms, the lesson is that compliance infrastructure needs to be built early in the journey and treated as a core part of the business from the outset. Strong growth, a well-known brand and an impressive customer base may strengthen the commercial case, but they won’t compensate for weak systems, governance or oversight when a firm is seeking a major regulatory permission. Revolut’s experience shows that in financial services ambition must be matched by evidence, and that lasting regulatory approval depends on controls keeping pace with growth.”