Bank of England Governor Addresses Concerns Over Revolut’s Banking License Hold-Up
In a recent interview, Bank of England Governor Andrew Bailey dispelled rumors of tension between the central bank and the UK government regarding the delayed approval of fintech giant Revolut’s full banking license. With the spotlight intensifying on Revolut’s transition from a digital payments platform to a licensed bank, Bailey emphasized that relations remain collaborative and focused on ensuring both financial stability and innovation.
Background: Revolut’s Long Road to a Banking License
Since launching its banking license application process in 2021, Revolut has been navigating a complex path marked by rigorous regulatory scrutiny. In July 2024, the Prudential Regulation Authority (PRA), part of the Bank of England, granted the company a restricted banking license, ushering Revolut into the "mobilization" phase—a crucial step before full-fledged bank status is granted.
During this phase, Revolut is limited to holding up to £50,000 in customer deposits, a fraction compared to traditional high street banks like Lloyds, Barclays, and HSBC. Moreover, UK Revolut customers still rely on its e-money license, meaning their deposits lack protection under the UK's Financial Services Compensation Scheme, which safeguards up to £85,000 per customer in the event of bank failure.
Dispelling the Rumors: No Fallout Between Bank and Treasury
Recent headlines suggested a meeting arranged by UK Finance Minister Rachel Reeves involving Revolut and the PRA was abruptly canceled following Governor Bailey's intervention — fueling speculation of strained relations. Addressing these reports during a CNBC interview, Bailey stated unequivocally, "There's been no falling out between [Reeves] and I on this, or indeed on anything." He described the relationship as "very good," underscoring mutual commitment between the Bank and Treasury.
The Wider Implications for UK Fintech and Economic Policy
The stakes surrounding Revolut’s license delay go beyond one fintech company; they touch on the UK’s competitive edge in the global financial technology race. The government has faced criticism from tech leaders who argue that regulatory hurdles may stifle innovation and investment, potentially driving fintech startups overseas to markets like the US.
Bailey acknowledged these concerns, affirming an openness to appropriate rule changes that could foster fintech growth without compromising financial stability. His nuanced position highlights the delicate balancing act policymakers face:
- Encouraging innovation and economic growth to keep the UK at the forefront of digital banking
- Maintaining robust safeguards to protect consumers and the financial system from potential risks
- Building trust between regulators, government, and fintech players to enable collaborative problem-solving
What Comes Next for Revolut and UK Banking Regulation?
Revolut’s journey toward a fully authorized banking license remains ongoing. As the PRA works closely with Revolut during the mobilization phase, industry watchers and customers alike await regulatory decisions that could set precedents for fintech banking in the UK.
Meanwhile, the government and Bank of England appear united in their intention to create an environment where fintech innovation flourishes alongside secure financial practices. This partnership will be critical as the UK seeks to solidify its place as a global fintech hub amidst increasing international competition.
Editor's Note
The evolving dynamics around Revolut’s banking license underscore broader themes in financial innovation governance. This story raises important questions about how regulators can balance growth with prudence in an era where digital financial services reshape traditional banking landscapes. As Revolut progresses, stakeholders should watch for how regulatory frameworks adapt—not only for fintechs but for financial stability and consumer protection in an increasingly digital economy.
