More fintechs secure UK banking licences as Revolut struggles to get approval

Two new challengers succeeded in securing banking licences from regulators today, raising more question marks for Revolut as it struggles to get approval from the City watchdogs.

Dutch payments fintech Adyen secured a licence, enabling it to continue offering the services it provides in Europe in the UK post-Brexit.

As a local acquiring bank, Adyen is able to settle transactions itself rather than rely on a banking partner. The new licence means it can offer bank accounts and cash advances to UK-based SMEs.

Adyen was founded in 2006 and listed on Amsterdam’s Euronext exchange in 2018 with a market value of more than €13bn. Its current market cap is over €23bn.

Mariette Swart, chief risk and compliance officer at Adyen, said: “The UK is a key market for Adyen and we’re excited to cement our position here with this banking authorisation. It will strengthen our ability to help domestic and international businesses achieve their ambitions faster.”

Perenna, which will offer customers fixed-rate mortgages of as much as 30 years, also secured a licence as it attempts to reduce the UK’s reliance on short-term fixed-rate deals.

The startup funds itself by issuing covered bonds to investors seeking long-term stable income, such as pension funds.

Government, regulators and think tanks have increasingly discussed the potential for long term deals to transform the mortgage market. Longer-term deals mean customers are less exposed to changes in interest rates.

Arjan Verbeek, chief executive & co-founder at Perenna, said: “In other countries, billions of pounds of pension savings are channelled into the real economy using covered bonds. Together, our unique funding model and banking licence will enable us to do exactly the same in the UK and unlock the housing market, an important part of GDP.”

A number of fintechs have managed to secure banking licences in recent months as more and more seek to expand into traditional banking territory. But while Adyen and Perenna have secured regulatory approval, Revolut, one of the UK’s largest fintechs, remains stuck in the lurch.

Revolut applied for its full license in early 2021 but the hunt for full authorisation has proved a speed bump to its growth in the past two years. In an interview with City PM last year, Revolut boss Nikolay Storonsky criticised the pace of regulators and said the UK was slow compared to competitor markets.

Then-finance chief Mikko Salovaara told reporters in February that the licence was “imminent” but authorisation from the Prudential Regulation Authority has not been forthcoming.

Revolut, which was previously the UK’s most valuable private firm, has been dealt some bruising write-downs as a result of the stalled licence. Investor Molten Ventures slashed its holding in the firm by forty per cent in part due to what it said was a lack of “visibility” around the progess toward a banking licence.

Revolut declined to comment.