It was a nondescript weekday morning, not notably different from any other. It was a bright day and the cafe was a little loud for working. I was sipping my room-temperature americano, and fervently tapping the key to increase screen brightness without achieving the desired effect. Blood was rushing to my head as I stooped low to plug in the power adaptor when I noticed a pop-up on my phone. A short second later I was squinting at my screen seeing the same information again as a new email arrived.

Both push notification and subsequent email served as proclamations that Revolut had been approved to launch as a bank, in its home market. My first reaction was a shrug. ‘So what?’ I thought as I went back to browsing Slack and catching up on tasks from the evening before. Later that day, I tried to read a little more about what that actually meant. Alas, Twitter was full of the usual commentators who survive off of said commentary. But in terms of meaningful insights, there were none, and even less from the horse’s mouth itself.

Don’t get me wrong, being a bank is HARD. Becoming a bank is probably even harder. And as I dwelt more on this news, I couldn’t shake the reaction that this just wasn’t that big a deal. The thing is though… I am one of said industry commentators. I work as an operator in the space helping brands launch banking products for a living; I know how hard it is. And my weekends are commentating on just exactly how this stuff works. Of all people in all places, of any time, it should be me who is gushing about this sort of news. Where payments are concerned I’m one of those people who rolls their eyes at the people who just don’t ‘get it.’ Cue the worlds shortest screenplay…

2019 Me: Guys look at this awesome feature that Revolut just launched!

2019 Friend: Who?

2019 Me: ... gives 2019 friend withering stare

Needless to say, 2026 me is no longer friends with that person. Anyway I digress. The point is, I totally understand how the average person might not care about this type of news. It likely won’t impact them and even if it did, the enormity of the task simply doesn’t show up on their radar. But me, someone who cares enough about the industry to enjoy writing about it in his spare time. Why was my reaction ‘meh’?

I think a lot of it comes down to blurred lines. Regulatory lines, that is.

From a consumer’s perspective, what is the difference? For half a decade now, Revolut have been offering services functionally indistinguishable from (and experientially lightyears beyond any) bank that exists in the market.

With Community Banks and BaaS providers across the West allowing ever bigger brands to launch ever more specialist banking products, it seems the licence to bank is really becoming a licence to distribute. I wouldn’t be surprised in 5/10 years if there is an entire rethink of the regulations governing what it means ‘to bank’ vs what it means to be a Bank. Much like Western Union’s Payments licence vs a grocer’s agent licence.

I’ve compiled a small list of Banks/Brand partnerships below, and this is just a small list of them.

The market today is a slew of Brands that are not banks, offering everything (and I mean EVERYthing) that a conventional bank offers to its SME and consumer base. Back to Revolut.

So, Revolut is now a bank. Not in a regional outpost, but in its home market where they have over 13 Millions users. Revolut is now a Bank, but for the life of me, what should be treated with fanfare.. just isn’t?

Let’s look at what they have already.

Interest? Yep they’ve been doing that through numerous paths, notably their most recent partnership Clear.Bank.
FX? - This was their launch offering back in the days when they were a prepaid card.
Payments? - Well duh? They do this and better than any bank across the UK and Europe.
Accounts? - Yep.
Direct Debits? - Yep.
Cards? - Yep.
Investments? - Yep
What about Credit then? Yep and Yep. (They offer credit cards and personal loans.)
They also do a whole host of things banks can’t/won’t do, but that’s for another time.

So what then, what is the actual point of becoming a bank.

I’ll have to defer to Coolio here and quote

“The way thing’s are going, I don’t know”

(click if you have Youtube premium - the comedy is just not worth the ads).

It could be capital efficiency. Perhaps Revolut can grow faster if they aren’t parking obscene amounts of their own money as float and can instead leverage a bank’s capital adequacy ratios to fund scale and growth.
It could be that they want base rate (although something tells me they already basically get it wherever they park client cash.)
It could be that they want to go up the food chain to bigger business (but I doubt that)
Maybe it’s a play into lending, treasury, or God forbid- their own BaaS play (at the risk of cannibalising their own success I highly doubt it).
But who knows? Nik Storonsky is nothing if not ambitious. At this stage I am waiting for him to go full Elon and start a hardware company but that’s a musing for another time.

So if you’ve read this far for an insight, more fool you. As you won’t be getting one. I don’t know what Revolut’s plans are. But as a meta-analysis on the industry, I think it is interesting that getting a banking licence (as already mentioned a huge undertaking) is having such a non-obvious outcome. It would be a bit like starting a rocket company without a clear objective that you wanted to take stuff to space.

The banking grid as it exists today, offers few ways to connect. Most banks builds user experience. But increasingly some banks are building sockets(APIs) for brands to power their own. And I think as banks look sideways at their competitors and see the growth of the modern BaaS Providers and begin to wonder, “why are we delivering a single product for a giant demograph”

Moreover, the legacy banks must look at these upstart banks, (who on the face of it don’t seem to have any secret banking ingredients), and wonder how? It seems to be the entry path. These banks are building sockets. Easy to plug in, fast to connect to the banking grid but do seem to have the sockets more amenable to connecting to the banking grid.

In focussing on the single demograph, Revolut has simply wiped the floor with the legacy banks deposit bases. And now those deposit bases are about to go off balance sheet. The bigger players have choice. Adapt. Or find an adaptor. But JP Morgan and Barclays can’t build the perfect product for the perfect market. because there isn’t one. Their are perfect products perfect marktets, each differentiated by the demograph or industry’s challenges and preferences. And the only way to cater to that is through distribution channels that know those problems better than anyone else. For gig economies, that’s through Lyft, Uber, Doordash and the like. But for Shipping and logistics, its going to be a brand like Flexport. For real estate its going to be a Rightmove, for Tax its going to be an Intuit.

The question isn’t ‘What will Revolut do now it’s a bank?’ The question is, how do banks stay relevant in the future. And it seems more and more obvious to me every day. Build sockets to your infrastructure. Or find an adaptor. Brand’s know their customers better. And Banking in the age of AI is a utility, no a service.

Please find another week of new, financings, exits and product launches below!

Daniel Cronin

Highlights below of deals since the last post in the fintech space across the UK & Europe. Deal data powered by Dealroom.

KAST raised an $80 million Series A co-led by QED Investors and Left Lane Capital, as investors continue to back stablecoin-based payments infrastructure

Wayflyer secured a $250 million, two-year credit facility from ATLAS SP Partners, which is financing rather than equity but still a strong signal for fintech credit appetite.

Health insurance startup Alan raised a €100 million round led by Index Ventures, pushing the French health-insurance fintech to a €5 billion valuation.

PactFi secured a $25 million Series A led by 7RIDGE to modernise private credit operations

Cleafy announced €12 million in Series B funding to scale banking fraud prevention across Europe.

Ramp acquired Billhop, a London- and Stockholm-based payments infrastructure fintech, to accelerate its UK and EU expansion.

OakNorth completes strategic transaction with Monite to further enhance its business banking offering

As mentioned above Revolut secured a full UK banking licence, ending a long wait with the PRA and giving it a stronger base to expand lending and full-service banking in its home market.

Coinbase opened crypto futures trading across 26 European countries, widening its derivatives reach in the region.

Bitpanda said it is leaning into bank partnerships and tokenization as it expands internationally ahead of planned IPO preparations

The Bank of England signalled it could revise proposed sterling stablecoin rules if the industry brings workable alternatives before draft rules are published in June

Fintech Moats Don’t Compile by Matt Brown dicusses the impact of AI on Fin and Tech independently. Great piece!