Nikolaj Storonski, founder and CEO of Revolut.
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LONDON – The boss of British financial technology giant Revolut told CNBC he is optimistic about the company’s chances of getting a British banking license as a jump in the number of users helped the company post full-year pre-tax profits booked.
In an exclusive interview with CNBC, Nikolay Storonsky, CEO and co-founder of Revolut, said the company is confident of securing its UK banking license after overcoming a number of key hurdles in its more than three-year journey to gaining approval from the British bank. supervisors.
“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 yet raised any outstanding concerns about the fintech.
Storonsky noted that Revolut’s sheer size meant it took longer for the company to get its banking license approved than would have been the case for smaller companies. Several small financial institutions have been able to get approval for a banking license with few customers, he added.
“British banking licenses are being approved for smaller companies,” Storonsky said. “They usually approve someone twice a year,” and they tend to be smaller institutions. “Of course we are very big, so it takes extra time.”
Revolut is a recognized electronic money institution (EMI) in Great Britain. But it cannot yet offer credit products such as credit cards, personal loans or mortgages. A banking license would allow the company to offer loans in Britain. The company has faced long delays in its application, which it submitted in 2021.
A major issue the company faced was that its share structure did not comply with the rules of the Prudential Regulation Authority, the regulatory body for the financial services industry under the Bank of England.
Revolut has multiple share classes and some of these share classes previously had preferential rights attached to them. One of the conditions imposed by the Bank of England for granting Revolut its British banking license was to merge the six share classes into ordinary shares.
Revolut has now resolved this, with the company closing a deal with a Japanese technology investor Soft Sofa to transfer its shares in the company to a unified class, waiving pre-emptive rights, according to a person familiar with the matter. News of the resolution with SoftBank was first reported by the Financial Times.
2023 a ‘breakthrough year’
The fintech giant released financial results on Tuesday showing full-year pre-tax profit rising to £438 million ($545 million) in 2023, offsetting a pre-tax loss of £25.4 million in 2022. Group revenues increased by £95 million. % to £1.8 billion ($2.2 billion), up from £920 million ($1.1 billion) in 2022.
Revolut Chief Financial Officer Victor Stinga said the company’s growth came from a record jump in user numbers – Revolut added 12 million customers by 2023 – and strong performance across all its key business areas, including card fees, foreign exchange and wealth. and subscriptions.
“We view 2023 as what we would call a breakout year from a growth and profitability perspective,” Stinga said in an interview this week.
Stinga said revenue growth was driven by three key factors, including customer growth, strong performance in key revenue lines and a significant increase in interest income, which he said now represents around 28% of Revolut’s revenue.
He added that Revolut has made exercising financial discipline a top priority in 2023, by containing operating costs and adopting a ‘zero-based budgeting’ philosophy, where any new expenditure must be justified and accounted for before it is considered acceptable.
This translated into administrative costs rising much less than revenues, Stinga said. Administrative costs increased by 49%, while revenues almost doubled year-on-year.
Revolut has been investing more aggressively in advertising and marketing, he added, with the company deploying $300 million in advertising and marketing last year. The company’s business banking solutions are also a top priority, with Revolut deploying around 900 employees for business-to-business sales.