FinTech: Revolut Sets Sights On U.S. Banking License

October 13, 2020 | FinTech, News

According to a CNBC exclusive, Revolut is weeks away from applying for a U.S. banking charter.

Revolut, the European fintech giant and digital bank, is likely to apply for a U.S. banking license at the Federal Reserve Bank of San Francisco and California’s Division of Financial Institutions in the coming weeks, CNBC said.

U.S. ambitions

The U.K.-based digital bank, which has expanded rapidly after its founding in 2015, launched in the U.S. in March this year after nearly a year in beta testing.

In February, Revolut made a brilliantly timed move to raise $500 million at a valuation of $5.5 billion – a threefold increase from when it was last valued by investors at $1.7 billion in April 2018.

With ambitions to offer a financial supermarket in the palm of the customer’s hand, the bank’s digital app offers FX, stock and crypto brokerage, and P2P payments.

Its app-based banking services are conducted in the U.S. through the Metropolitan Commercial Bank (NYSE: MCB). Boasting half a million users, it recently started offering users a higher interest rate, according to CNBC’s sources.

If it obtains a charter, Revolut will no longer need to tie up with another chartered bank. It can offer deposit-taking, custody, and fiduciary services on its own account.

According to CNBC’s sources, though Revolut is applying for a California charter, it can enter inter-state agreements to operate practically anywhere in the U.S.

Recent U.S. charters

Recently, fintechs such as Square (NYSE: SQ) and Varo Money got the green signal to set up banks in the U.S.

Digital exchange Kraken also managed to obtain an SPDI charter under Wyoming law.

Lending Club (NYSE: LC) did not choose to apply. Instead, it acquired Radius Bank for $185 million to gain access to the latter’s national charter.

Revolut still to make profits

Will the U.S. charter push Revolut into the green?

Though Revolut reported a loss of £107.4 million for 2019, it made amends with impressive growth. “We tripled our revenues, increased retail customers from 3.5 million to 10 million, increased daily active customers by 231%, and the number of paying customers grew by 139%,” founder and chief executive Nikolay Storonsky said at the time.

It also doubled its gross margin in 2019.

Related Story:   Revolut Reports Robust Revenue Growth Even As Losses Triple

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