Summary List Placement
The UK neobank applied for a full banking license in the UK, which would allow it to offer overdrafts, loans, and deposit accounts, Bloomberg reports. The license would also guarantee Revolut is covered by the UK’s Financial Services Compensation Scheme, which protects customer deposits of up to £85,000 ($109,000). Revolut currently has an emoney license in the UK, holding customers’ funds in big banks, and a banking license in the EU.
This mirrors a trend in the US, where fintechs are seeking more operational autonomy via banking licenses. In 2020, Varo became the first fully licensed US neobank. And later in the year, Square obtained FDIC insurance, and SoFi received preliminary Office of the Comptroller of the Currency (OCC) approval for a bank charter, pushing them both a step closer to bank charter eligibility.
A charter from the OCC enables nonbank financial services firms to expand their range of products and eliminate the costs of partnering with a sponsor bank to hold the deposits, which could be particularly beneficial as the pandemic has diminished the use of physical branches and digital banking penetration is on the rise.
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Source:: Businessinsider – Finance