Nikolay Storonsky, founder and CEO of Revolut.
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LONDON — The chief executive of British financial technology giant Revolut told CNBC he is optimistic about the company’s chances of getting a British banking license, as the company reported record pre-tax profits for the year thanks to a surge in users.
In an exclusive interview with CNBC, Revolut CEO and co-founder Nikolay Storonsky said the company is confident it has secured its UK banking license after overcoming several significant hurdles in the more than three-year journey to regulatory approval.
“Hopefully we’ll get it sooner or later,” Storonsky told CNBC via video call. Regulators are “still working on it,” he added, but have not raised any outstanding concerns about the fintech so far.
Storonsky noted that Revolut’s sheer size meant that it took longer for the company to get its banking license approved than it would have for smaller companies. Several small financial institutions have been able to get banking licenses approved with few customers, he added.
“British banking licenses are approved for smaller companies,” Storonsky said. “They usually approve someone twice a year,” and they tend to be smaller institutions. “Of course, we’re very large, so it takes extra time.”
Revolut is a licensed electronic money institution, or EMI, in the UK. But it can’t yet offer lending products like credit cards, personal loans or mortgages. A banking license would allow it to offer loans in the UK. The company has faced long delays in its application, which it filed in 2021.
A major issue the company faced was that its share structure did not comply with regulations set by the Prudential Regulation Authority, the financial services regulator that falls under the Bank of England.
Revolut has multiple share classes, and some of those share classes previously had pre-emptive rights. One of the conditions imposed by the Bank of England on granting Revolut its UK banking licence was the consolidation of the six share classes into ordinary shares.
Revolut has since resolved this, striking a deal with Japanese tech investor SoftBank to transfer its shares in the company to a unified class, giving up its pre-emptive rights, a person familiar with the matter said. News of the resolution with SoftBank was first reported by the Financial Times.
The fintech giant published financial results on Tuesday, showing full-year pre-tax profit rose to £438 million ($545 million) in 2023, after 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.
According to Victor Stinga, Revolut’s CFO, the company’s growth has been driven by a record jump in user numbers (Revolut added 12 million customers in 2023) and strong performance across all key business areas, including card fees, FX & assets, and subscriptions.
“We see 2023 as a breakthrough year in terms of growth and profitability,” Stinga said in an interview this week.
According to Stinga, revenue growth was primarily driven by three factors: customer growth, strong performance in key revenue lines and a significant increase in interest income, which it says now accounts for around 28% of Revolut’s revenue.
He added that Revolut has made maintaining financial discipline a top priority in 2023, by keeping operational 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.
According to Stinga, this resulted in administrative costs increasing much less than revenues. Administrative costs increased by 49%, while revenues almost doubled compared to last year.
Revolut is investing more aggressively in advertising and marketing, he added, with the company spending $300 million on advertising and marketing last year. The company’s business banking solutions are also a top priority, with Revolut dedicating about 900 employees to business-to-business sales.