Fintech company, Revolut, seeks to recruit Ernst & Young (EY) in its endeavor to secure a banking license

Fintech company, Revolut, seeks to recruit Ernst & Young (EY) in its endeavor to secure a banking license

In the dynamic world of fintech, the journey of digital bank Revolut towards securing a full UK banking license has been marked by challenges and progress. The process, described as the most extensive in the UK fintech sector, has been fraught with regulatory scrutiny, corporate governance issues, and strained relationships with auditors.

Revolut, with over 10 million UK customers and a presence in 40 countries, began the mobilisation process in 2023, making it the first to enter this phase with a significant customer base. However, the size and global scale of the digital bank have made the licensing process complex, delaying its operation as a fully regulated UK bank.

One of the main challenges Revolut has faced is the concern over its regulatory compliance. Issues with fraud controls have been a point of contention, with a higher incidence of automated push payment fraud reports compared to traditional banks. This, coupled with concerns about its corporate governance, has added to the regulatory scrutiny.

The digital bank's relationship with auditors has also been strained. In 2023, Revolut considered switching auditors after its accounts were only signed off with a health warning. BDO, the company's then-auditor, was replaced by EY in 2024, following disputes that delayed the approval of financial accounts and impacted regulatory confidence.

Regulatory efficiency and thoroughness have also played a role in the delays. UK regulators, including the Prudential Regulation Authority (PRA) and Bank of England, have taken a cautious approach, reflecting complex assessments of Revolut’s structure and controls. This cautious approach, coupled with broader industry concerns about slow regulatory decisions and obstacles to growth, has contributed to delays in authorization.

The delays and challenges have attracted high-level attention due to Revolut’s significant valuation ($65 billion) and its potential impact on the UK fintech landscape. Chancellor Rachel Reeves sought to speed up the licence process by trying to arrange a meeting between the fintech and regulator's. However, Andrew Bailey, governor of the Bank of England, blocked the meeting over concerns that regulation should be independent from political interventions.

Despite the delays, Revolut’s CEO and the Bank of England maintain a constructive dialogue, and the company remains on track to become fully authorized as a UK bank within 2025. The digital bank has appointed EY as its auditor for the financial year ending December 2026, a move that follows the fractured relationship with BDO. A spokesperson for Revolut stated that they are progressing through the final stages of mobilisation and continue to work constructively with the PRA.

The change comes as Revolut aims to launch as a fully-fledged bank in the UK within 2025. The appointment of EY, a Big Four firm, is seen as a positive step towards achieving this goal. Victor Stinga, chief financial officer at Revolut, extended thanks to BDO for their partnership and contributions over the past seven years.

The clash between Chancellor Rachel Reeves and Andrew Bailey over the regulatory process for Revolut was reported by The Financial Times in 2023. The digital bank faced a three-year struggle to secure approval for its banking licence from regulators, finally receiving approval in July 2024. BDO's report in March 2023 flagged concerns about the "completeness and occurrence" of £477m of Revolut's revenues. Revolut paid BDO £5.3m in 2024 for audit fees before the change to EY.

In conclusion, Revolut's journey towards becoming a fully regulated UK bank has been marked by challenges, but the digital bank remains on track to achieve this goal within the next few years. The change of auditor from BDO to EY is seen as a positive step towards achieving this goal. The delays and challenges have attracted high-level attention, but the constructive dialogue between Revolut's CEO and the Bank of England indicates a positive outlook for the future.

1. The banking license process for Revolut, a fintech company with over 10 million UK customers and a global presence, has been complex due to regulatory scrutiny, corporate governance issues, and strained relationships with auditors.
2. In an effort to become fully authorized as a UK bank within 2025, Revolut appointed EY as its auditor for the financial year ending December 2026, a move that is viewed as a positive step towards achieving this goal.

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