Revolut becomes latest UK fintech firm to seek banking license

LONDON (Reuters) - British financial technology firm Revolut said on Wednesday it has applied for a European banking license, as it bids to join a growing number of digital-only banks looking to win away customers from larger, traditional lenders. Revolut, which has offered a pre-paid cash card since 2015, is one of a number of smaller upstart finance firms hoping that coming regulation and technology can help it break the dominance of bigger banks. Financial technology firms like Revolut are trying to chip away at traditional banks by offering users slick apps, slashed fees and an instant overview of their finances. From challenger banks to digital currencies like Bitcoin, the British government regards the ‘fintech’ sector as a key source of growth. Changes coming into force in Britain and across the European Union will see banks forced to open up their closely held customer data to rivals, who will be able to use it to build products and better target clients. Peers like Britain’s Starling Bank and Monzo and Germany’s N26 have already secured banking licenses ahead of the new rules. “Even without a banking license, we have attracted over 950,000 users across Europe, many of whom consider Revolut as their primary current account and spending card,” said Nikolay Storonsky, Revolut’s founder and CEO. The firm’s tagline promises an experience “beyond banking”, but so far it has been unable to offer some of the core services provided by banks, including current accounts, overdrafts, loans and direct debits. It expects to receive a license effective in the first half of 2018 and to start offering these services in select markets straightaway. It said it has applied for its license through the Lithuanian central bank and has sufficient capital in place. Current accounts and credit will initially be available to users in Lithuania, before being rolled out to Estonia and Latvia and, as soon as possible, Britain. Next in line are France, Germany and Italy and eventually the rest of the European Union, the firm said. Fintech lender Cashplus said last week it was considering applying for a UK banking license, while telecoms giant Orange has launched its own bank in France in a bid to steal established lenders’ market share by capitalizing on the rise of smartphones. But incumbent banks are stepping up investment in their own digital platforms too. Last month, HSBC became the first to launch an app that allows customers to manage accounts with multiple banks in one place and offers them a similar financial overview as the app-only challengers.