The British financial technology startup Revolut has recently applied for a banking licence in the United States, just after a week of pulling operations from Canada. Revolut said that a U.S. banking licence would allow it to offer a better range of financial products to U.S. customers which include overdraft protection, loans, and deposit accounts.
"We’re on a mission to build the world’s first global financial super app, and pursuing a US banking licence is an integral part of the journey," Revolut co-founder and CEO Nik Storonsky said.
Revolut has attracted thousands of customers since its launch in the U.S. market in March 2020. If the company manages to receive a charter in California, then it can operate through the U.S. as an independent bank.
There are still discussions going on which means that it could take a while before the authorities will grant a charter to the company.
Right now, Revolut has partnered with Metropolitan Commercial Bank in the U.S and it handles Revolut’s deposits and the accounts are Federal Deposit Insurance Corporation (FDIC)-insured. They also provide cards for Revolut.
In the U.S., Revolut also launched Revolut Business and these accounts let a company send and receive international payments easily. With the launch of this feature, the company is targeting small and medium-sized businesses, which are chased by fellow digital competitors Chime and Varo.
"Small and medium-sized businesses are massively underserved in the US, and we want to empower them with the tools to grow and scale globally," Storonsky said.
"Tackling fragmented processes, high fees, and other business banking pain points, we built an end-to-end solution that saves business owners time and resources to focus on what matters — running their business."
The challenger bank already holds a specialised banking licence from the Bank of Lithuania, which allows it to offer a wider range of solutions to customers in Europe.
Revolut currently has 15 million customers for its financial app and most of them are in the U.K and the European Union.
The challenger bank has said that its banking service has gathered over 500,000 sign-ups in Europe. The users can access multi-currency accounts with this service, along with physical and virtual corporate cards and money transfer ability in 29 currencies.
Along with Revolut, various other fintechs are pursuing bank charters in the U.S. which includes San Francisco’s Brex, a fintech that is best known for offering banking services to startup businesses and it applied for an industrial loan company charter (ILC) last month.
Fintechs know that the charter route is expensive and time-consuming, however, it is the best option for the banks as it provides an ease to launch products and generate more revenue. Varo Bank’s historic charter journey took three years and needed $100 million before it got approved last summer.