Nikolai Storonsky, Founder and CEO of Revolut.
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LONDON — The boss of British fintech giant Revolut told CNBC he is optimistic about his company's chances of getting a banking license in the U.K., as the company saw a surge in users that prompted it to report record full-year pre-tax profits.
In an exclusive interview with CNBC, Nikolai Storonsky, CEO and co-founder of Revolut, said the company feels confident about securing its UK bank license, after overcoming some major hurdles in its more than three-year journey to gain regulatory approval.
“We hope to get that sooner or later,” Storonsky told CNBC via video call, adding that regulators are “still working on it” but have not yet raised any outstanding concerns with fintech companies.
Storonsky noted that Revolut’s large size meant it took longer for the company to get its banking license approved than for smaller firms. He added that many smaller financial institutions were able to win approval for a banking license with only a handful of clients.
“Banking licenses in the UK are approved for small companies. They usually approve someone twice a year,” Storonsky said, and these are usually smaller companies. “Of course, we are very large companies, so it takes extra time.”
Revolut is a licensed electronic money institution, or EMI, in the UK but cannot yet offer lending products such as credit cards, personal loans or mortgages. A banking licence would enable it to offer loans in the UK. The company has faced lengthy delays in its application, which it submitted in 2021.
One of the major problems the company faced was that its share structure was incompatible with the rules of the Prudential Regulation Authority, the financial services industry regulator under the Bank of England.
Revolut has several classes of shares, some of which previously had preferential rights. One of the conditions set by the Bank of England for Revolut to be granted its UK banking licence was that its six classes of shares be consolidated into ordinary shares.
Revolut has since solved this problem, striking a deal with Japanese tech investor Softbank Huawei has moved its shares in the company into a single class, giving up preferential rights, according to a person familiar with the matter. The Financial Times first reported the deal with SoftBank.
2023 launch year
The fintech giant on Tuesday released financial results that showed full-year net profit before tax rose to £438 million ($545 million) in 2023, swinging to profitability from a pre-tax loss of £25.4 million in 2022. Group revenue rose 95% to £1.8 billion ($2.2 billion), up from £920 million ($1.1 billion) in 2022.
Revolut’s CFO, Victor Stinga, said the company’s growth was driven by a record jump in user numbers — Revolut added 12 million customers in 2023 — as well as strong performance across all of its key business lines, including card fees, foreign exchange and wealth, and subscriptions.
“We view 2023 as what we call a breakout year from a growth and profitability standpoint,” Stinga said in an interview this week.
Revenue growth was driven by three key factors, including customer growth, strong performance across key revenue lines, and a big jump in interest income, which he said now represents about 28% of Revolut's revenue, Stinga said.
He added that Revolut has made practicing financial discipline a key priority in 2023, by keeping operating expenses under control and adopting a “zero-based budgeting” philosophy, where every new expense must be justified and accounted for before it is considered acceptable.
This resulted in administrative expenses growing at a much lower rate than revenue, with administrative costs up 49% while revenues nearly doubled year-over-year, Stinga said.
He added that Revolut is investing more heavily in advertising and marketing, with the company investing $300 million in advertising and marketing last year. Commercial banking solutions are also a top priority for the company, with Revolut dedicating about 900 employees to B2B sales.
