Having a banking licence allows the firm to hold account holders’ deposits but with restrictions, which will be decided by the regulator that oversees the banking industry.
It therefore provides the chance for the global fintech firm to move into the loan and mortgage market and compete with traditional high street providers.
In business terms, the company is now in the “mobilisation stage”, which presents Revolut with time to build up its UK operations before officially launching its new venture.
Current customers have been told that “nothing changes” in terms of their accounts and they can continue using their e-money account as normal.
At present, the firm, which was founded in 2015, offers a range of accounts, including a free standard plan to customers and paid options for premium customers, which rise to £14.99 per month. Monthly fees for Revolut accounts increased at the end of 2023 as part of the first price hike since 2018.
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The various paid options come with a raft of digital subscriptions including Deliveroo, NordVPN and dating app Tinder.
It has become a popular account to have for travelling abroad and has amassed nine million UK customers and over 45 million around the world.
This is largely thanks to its global travel insurance on offer with a premium account and discounted international bank transfers.
The news has sparked a reaction from finance experts, who had their say on what customers can expect.
‘Revolut faces increased scrutiny from regulators’
Andrew Hagger of MoneyComms told YourMoney.com: “Securing a UK banking licence will eventually enable Revolut to move from being an e-money firm to being able to hold customer deposits, but only once the current licence restrictions are removed.
“The move also means that Revolut will be able to offer own-brand loan products and mortgages rather than acting as an intermediary.”
Hagger added: “This current ‘restricted’ licence means Revolut will face increased scrutiny from the regulators as it gears up for the approval of a full licence, at which stage it would involve having to guarantee customer deposits under the FSCS up to £85,000.”
Benjamin Hatton, banking and payments analyst at GlobalData, said: “Revolut will hope it can catch up with other leading fintechs in the UK, including Monzo and Starling, which are beginning to become real contenders within the UK banking space.”
Hatton added: “Further competition in the market is no bad thing, driving improvements in competitors [that] are now challenged with competing with yet another digital innovator.”
The development was described by the UK CEO Francesca Carlesi as a “significant step forward for Revolut and our customers”.
Carlesi added: “It is a tremendous responsibility to be a bank in the UK and we will work relentlessly to offer products and services that improve the financial lives of everyone who uses Revolut.
“This is the next phase in Revolut’s journey in the UK – we can’t wait to get going.”
