Revolut cans merger plan for de novo U.S. banking license application

Britain’s Fintech Revolut has canceled plans to merge with a U.S. lender and instead applied for an independent U.S. banking license. The London-headquartered financial services firm held talks with U.S. officials about applying for a license through the Office of the Comptroller of the Currency (OCC) in hopes of accelerating the process.

Revolut emphasized the importance of the U.S. market to its global growth strategy, stressing that its long-term plan is to establish a bank in the United States. It also stated that it will continue to actively explore all options, including the U.S. de novo bank license application.  

Previously, Revolut sought to acquire a nationally chartered U.S. bank, which would have allowed the resulting conglomerate to offer banking services across 50 states. The company hoped the process would be a breeze due to the deregulatory push under President Donald Trump’s administration.

At the time, Revolut preferred an acquisition to applying for a banking charter on its own because that would accelerate its U.S. expansion. 

Revolut concludes that the acquisition could be tricky

Apparently, the Revolut team made a U-turn on the acquisition after concluding that a takeover would be tricky if it had to keep bricks-and-mortar branches open. An acquisition would also require the fintech to engage with U.S. regulators, who would need to approve changes to the targeted lender’s ownership.

Meanwhile, Revolut believes that the U.S. has a more expansive traditional banking sector and a large number of wealthy consumers that UK-based banks seek to tap into.

The decision comes as British fintechs reportedly set their sights on the U.S. as a potential market for growth amid a significant slowdown in consumer growth in the home market. However, applying for a national charter through the OCC can sometimes take years to get approval.

On the other hand, the Trump administration has revoked a Biden-era OCC rule that imposed strict oversight of bank mergers.

Fintech executives are now saying that they have noticed a change in the OCC’s attitude, and many are pushing their individual companies to apply for the bank charter. Law firm Freshfields’ data reveals that 14 applications were submitted to the OCC for a de novo charter to become a limited-purpose national trust bank, many from fintechs.

Revolut seeks a full banking license in Peru

Revolut is also looking to compete with some of Latin America’s fintechs, having recently applied for a full banking license in Peru. The license would allow the London-based company to roll out a range of localized services and products, offering Peruvians greater financial control.

Meanwhile, Peru is reportedly the fifth country in the region that Revolut has entered. The company has already won approvals in Mexico, Colombia, Brazil, and Argentina. On the other hand, SBS, Peru’s national banking regulator, says that the country has a highly concentrated financial system, with only four of the country’s largest banks accounting for over 82% of the total loans.

“Our main competitors are going to be incumbents, because there are no huge new players like Nubank or Mercado Pago…I see ourselves as a way to increase competition and improve the experience of the banked and unbanked population in Peru.”

–Julien Labrot, Peru Chief Executive Officer at Revolut

According to Labrot, Revolut offers notable remittance and multi-currency services, which give it a competitive edge in Peru. He also notes that approximately 1 million Peruvians live on remittances from overseas. 

Meanwhile, the expansion is part of the company’s broader push to reach 100 million customers worldwide, a significant jump from the current 70 million. Revolut also hopes to generate over $100 billion in annual revenue as it continues to penetrate more global markets.

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