The UK’s most valuable fintech received a banking license last year, yet Revolut continues to operate under limitations, failing to achieve full financial institution status. Despite these constraints, Revolut operates with a capped customer deposit limit of £50,000 and remains well below the billions held by leading UK banks such as Barclays, HSBC, or Santander.

Revolut has been operating in an e-money unit capacity rather than a full bank status since its mobilization phase. This arrangement means that customers are not covered by the government’s Financial Services Compensation Scheme, which insures up to £85,000 if their bank faces financial issues.

Navigating Transition Challenges

The delayed transition into a fully regulated banking institution for Revolut is largely due to the fintech’s scale. With over 10 million customers in the UK alone and operations across more than 40 countries, no other organization has sought such licensing with more than half-a-million customer accounts.

Regulators have also raised concerns about compliance and fraud. Last year, Revolut was found to experience significantly higher levels of fraud compared to traditional lenders like Barclays. This high incidence, often related to push payment scams, questioned the company’s security measures.

Revolut Considers Alternative Strategies

The obstacles faced by Revolut have led it to explore alternative market entry strategies. One potential avenue is bypassing the lengthy banking charter process through a strategic acquisition of an existing U.S.-based bank. This approach could accelerate global expansion for Revolut, which currently has a valuation of $45 billion.

Revolut is reportedly considering deals that could not only significantly boost its valuation but also provide the necessary funds and regulatory access to support international growth.