Trump’s push for freer market sets off UK digital banks migration to the US

British fintechs are accelerating their push into the United States, viewing Trump’s deregulatory agenda as a short-term opportunity to move quickly.

Revolut and Starling, two of the UK’s top digital banks, are weighing acquisitions of US lenders. By purchasing a nationally chartered bank, they could instantly secure an American banking license, allowing them to lend and operate across all 50 states without enduring years of regulatory delays.

Revolut, Europe’s most valuable fintech, has already engaged advisers, including Bank of America, to explore potential deals. Sources familiar with the matter say the company wants to strengthen its US presence, which already serves millions of customers.

Starling, meanwhile, is considering both applying for a license and making an acquisition, though the latter offers a faster route.

The firm sees the US as a key growth market for fintechs. Customer growth in the UK is slowing, so many companies are looking overseas to expand. The US has a large population and a bigger deposit base. And that makes it appealing to lenders who are looking to scale quickly.

US regulators clear path for fintech expansion

The Washington regulatory climate has shifted under Trump. The Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) have all relaxed regulations intended to make mergers more difficult.

Michelle Bowman, recently confirmed to the Fed’s vice-chair of supervision post, has vowed a friendlier approach toward business. She signaled that merger approvals would now be faster — and less restrictive. The OCC and FDIC have also rescinded guidance that had previously slowed deals.

Industry lawyers stressed that time is of the essence for fintechs. David Portilla, a management committee member at Davis Polk, noted that the window of opportunity is open but might not remain so for long, making it best to act quickly.

The trend is evident in recent maneuvers in the field. In March, the United Kingdom’s digital lender OakNorth acquired Community Unity Bank in Michigan. The company said the deal provided a “foothold” in the United States and a base to grow. Rather than waiting several years for approval, the new development bank could take advantage of the existing bank’s license, staff, and infrastructure to start working.

The Swedish “buy now, pay later” firm Klarna is also considering seeking a US license. However, it will likely wait until after its proposed New York listing before deciding.

Why acquisitions make sense

For UK fintechs, acquisitions are looking more and more like the quicker way into the US market. By purchasing a bank, they can avoid the long wait to obtain a license, which can take several years. A US charter allows firms to cut through a lot of the bureaucracy in accessing new customers and deposits, which is seen as an attractive shortcut when UK growth has decelerated.

The design has already been road-tested. OakNorth’s purchase of a bank based in Michigan earlier this year displayed how quickly a digital lender can access a footprint when it buys rather than builds from the ground up.

Speed is especially crucial for Revolut, which is also considering deals in the Middle East and recently bought Cetelem Argentina from BNP Paribas. The company is raising $1 billion in new financing to increase its valuation to roughly $65 billion and enable its global expansion plans.

Still, challenges remain. The regulators will also scrutinize any takeover, ensuring the new owner has the proper systems, resources, and risk management to operate safely. The Office of the Comptroller of the Currency has been especially aggressive on questions of data and consumer protections.

There’s also the issue of branches. It’s very different from the UK, where there has been a withdrawal even by traditional banks from the high street. At the same time, the US retail banking system remains heavily dependent on physical presence on the ground. That could create unforeseen costs for digital-first companies that have built their businesses on being branchless.

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