The CEO of Revolut said that the recent turmoil in the banking industry caused the suspension of the banking license of this company in the UK.
Nick Sidonsky, the head of this firm, during a conversation with media representatives, said that the increased attention and special caution on the part of regulators are due not to certain actions of his company, but to the general state of affairs in the banking sector, which is in a state of crisis.
Revolut’s negotiations with two British regulators — the Financial Supervision Authority and the Prudential Regulation Authority — stretched for more than two years, although the standard regulations for obtaining a banking license provide for a period of less than a year.
The media, citing informed sources, report that the process of obtaining an official permit for Revolut to operate as a financial institution has been suspended or slowed down with a high degree of probability,
In 2022, the financial technology company was forced to strengthen internal control over financial reporting. This happened after the UK Financial Reporting Council recorded facts of distortions and errors in the firm’s audits.
In March of this year, the media reported that the board of Revolut criticized the regulator’s reaction to the audit. A month earlier, the company stated that the auditors’ report confirms the reliability of the financial statements in terms of compliance with actual activities. But at the same time, the auditors issued a warning about the likelihood of material misstatement of income information.
Obtaining a banking license in the UK could increase the profitability of Revolut. Higher interest rates increase the value of deposits and help the licensing process in other markets.
The results of special studies indicate that neobanks still carry out their activities on a limited scale. Less than 10% of consumers use accounts in these financial institutions as the main ones. Traditional banks continue to be a priority, especially in cases of mortgages and consumer lending.
Research also shows that convenience is the main value for 55% of non-banking customers. The speed of service delivery has become the main factor for 54% of consumers.
For 19% of neobank’s customers, security is the key factor. At the same time, among consumers of traditional banking services, the share of those for whom this aspect is of primary importance is 39%. These clients of standard financial institutions refuse digital transactions for security reasons.
As we have reported earlier, Revolut Reports First Annual Profit.