Nikolay Storonsky, founder and CEO of Revolut.
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LONDON – The boss of British fintech giant Revolut told CNBC he is optimistic about the company’s chances of obtaining a British banking license as user numbers surge and the company reports record full-year pre-tax profits.
Revolut CEO and co-founder Nikolay Storonsky said in an exclusive interview with CNBC that the company is confident that it has overcome some key obstacles in more than three years to obtain a British banking license.
“Hopefully we’ll get it sooner or later,” Storonsky told CNBC via video call. He added that regulators are “still trying to figure it out” but so far haven’t raised any outstanding concerns about fintech.
Storonsky noted that Revolut’s sheer size meant it took longer than smaller companies to get a banking license approved. He added that several small financial institutions had obtained banking licenses with few customers.
“UK banking licenses are being approved for smaller companies,” Storonski said. “They typically approve someone twice a year,” and they are usually smaller institutions. “Of course, we’re large, so it takes extra time.”
Revolut is a licensed electronic money institution (EMI) in the UK, but it cannot yet offer lending products such as credit cards, personal loans or mortgages. The banking license will enable it to provide loans in the UK.
A key issue facing the company is that its shareholding structure is inconsistent with the rulebook of the Prudential Regulation Authority, the financial services industry regulator under the Bank of England.
Revolut has a variety of share classes, some of which previously carried preferred rights. One of the conditions set by the Bank of England for granting Revolut a UK banking license was to split its six classes of shares into ordinary shares.
Revolut has since addressed the issue, with the company striking a deal with Japanese tech investors Softbank According to a person familiar with the matter, it will transfer its shares in the company into a unified class and give up priority rights. News of the settlement with SoftBank was first reported by the Financial Times.
2023 is the ‘breakthrough year’
The financial technology giant released financial results on Tuesday showing full-year pre-tax profit for 2023 rising to 438 million pounds ($545 million), swinging back from a pre-tax loss of 25.4 million pounds in 2022. % % rose to £1.8 billion ($2.2 billion), up from £920 million ($1.1 billion) in 2022.
Revolut chief financial officer Victor Stinga said the company’s growth was driven by record growth in user numbers – Revolut added 12 million customers in 2023 – and strong performance across all key business lines, including card fees, FX and wealth, and subscription.
“We see 2023 as a breakout year from a growth and profitability perspective,” Stinga said in an interview this week.
Stinga said revenue growth was driven by three main factors, including customer growth, strong performance in the main revenue line and significant growth in interest income, which he said currently accounts for about 28% of Revolut’s revenue.
He added that Revolut will implement financial discipline as a key priority in 2023, limiting operating expenses and adopting a “zero-based budgeting” philosophy, where every new expenditure must be justified and accounted for before it is deemed acceptable.
Stinga said this means that the growth of administrative expenses is much lower than the growth of revenue. Administrative costs increased by 49%, while revenue almost doubled year-on-year.
He added that Revolut has been more aggressive in investing in advertising and marketing, spending $300 million on advertising and marketing last year. The company’s business banking solutions are also a top priority, with Revolut dedicating about 900 employees to business-to-business sales.
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