Is Revolut a Bank?

Financial technology firm Revolut launched in the UK in 2015 as a digital payments service. Since then it has gone from strength to strength, making its mark across the globe and accruing more than 15 million personal customers in the process.

In 2018, Revolut achieved one of its biggest milestones and was granted a European Banking Licence from the Bank of Lithuania and the European Central Bank. But while this has enabled Revolut to offer new banking products across Europe, the company has yet to be granted a banking licence in the UK. 

So, this raises the question: is Revolut a bank? We examine this in more detail below.

Can Revolut Be Classed As a Bank?

Having been granted an EU banking licence in Lithuania in 2018, Revolut has been operating as a bank in both Lithuania and Poland since 2020. 

More recently, using the same banking licence, it has expanded its specialised banking operations into many European countries. Customers in the following countries are able to upgrade to Revolut Bank to receive additional services and deposit protection of up to €100,000.00:

• France
• Italy
• Portugal
• Bulgaria
• Croatia
• Cyprus
• Estonia
• Greece
• Latvia
• Malta
• Romania
• Slovakia
• Slovenia

But even though it is operating as a bank across some European countries, Revolut only applied for a banking licence in the UK in early 2021. For this reason, Revolut is not technically a bank in the UK. Instead, legally speaking, it is an electronic money institution. 

What this means is that Revolut is authorised to handle money, facilitate business transactions and currency exchanges. But what it cannot do is offer certain financial services in the UK. This includes offering protection under the UK government’s Financial Services Compensation Scheme (FSCS) which exists to protect customers of financial services firms in the event they fail. 

This is not to say that Revolut customers in the UK have no financial protection at all. Because Revolut is authorised by the Financial Conduct Authority (FCA), it must safeguard funds as per FCA requirements, the Electronic Money Regulations 2011 and the Payment Services Regulations 2017. This means that customer funds are stored in a segregated account with Barclays and Lloyds. 

Additionally, all card transactions are processed by the Mastercard or Visa network and are protected by Mastercard or Visa rules. 

What Are The Advantages of a Banking Licence? 

One of the main benefits of having a UK banking licence is the aforementioned FSCS protection. Under the scheme, if a company fails and is unable to pay claims against it, the FSCS will step in. Up to £85,000.00 per person, per bank, is protected, or up to £170,000.00 for joint accounts. 

Having this protection can help build customer trust in a brand and give them the reassurance that they won’t lose their money should something go wrong. 

But there are other benefits to having a UK banking licence. In this case, it would also allow Revolut to offer full-service current accounts with overdraft facilities, and potentially even credit cards. 

At the time of its licence application, Nik Storonsky, Founder and CEO of Revolut said: “A UK banking licence allows us to provide the essential financial products UK customers expect from their everyday primary bank account, such as loans, credit cards, overdrafts and deposit accounts, coupled with the additional trust and security that is offered through FSCS protection.

“We want to be the best in class for customer experience, value and capabilities, and offering full bank accounts allows us to do just that. In the future, we want to offer many more innovative products to our UK customers and we are excited to continue driving innovation and competition in the banking industry. Becoming a fully licenced bank in the UK is a central pillar of that ambition.”

What Does Revolut Offer and How Could it Grow? 

Revolut offers a range of different financial products, but one of its most popular is the Revolut Card. This allows customers to make purchases around the world, spend in multiple currencies and get automatic currency conversion at close-to-baseline exchange rates. 

On top of this, Revolut also offers several personal and business accounts. These provide a wide range of banking and money transfer services, including transfers abroad. Accounts and transactions can be managed via an app that also allows you to monitor how much you spend each month and set spending limits to help you budget.

Yet despite Revolut’s impressive portfolio, the firm is still looking to up its game. As mentioned above, once it has been granted its UK banking licence, Revolut hopes to offer a wider range of banking products including overdraft facilities and competitive personal loans. Users will no longer need to worry about negative balances, automatic top-ups and insufficient funds notifications. 

With this in mind, all that remains for customers to do is to watch this space and see what happens next in the Revolut journey.

We explain more about Revolut’s products in our review. To see how Revolut's travel card compared to similar services such as Wise and Monese, take a look at our in-depth guide here.