Qonto: Navigating the Path to Becoming a Real Bank
One of the most popular questions surrounding the French fintech startup Qonto is whether it is a real bank. The answer, for now, is no. However, CEO Alexandre Prot recently revealed that Qonto has applied for a banking license in France, signaling a potential shift in its status.
Currently, Qonto operates under a payment institution license obtained in 2018. This license allowed the company to introduce a buy now, pay later (BNPL) feature. However, acquiring a credit institution license would open up a world of possibilities for Qonto, including offering lending, savings, and investment options to its target market of European freelancers and SMBs.
Despite its current license being valid across the EU, not having a credit license has posed challenges for Qonto’s ambitious growth plans. The company recently celebrated reaching 600,000 customers but aims to achieve 2 million customers by 2030.
While expanding its services to compete with traditional banks seems like a natural progression, obtaining a banking license is no easy feat. Qonto’s SMB fintech competitors have taken different approaches to tackle this issue. Memo Bank was founded as a bank and offers lending to SMBs, Finom operates under an electronic money institution license, and Revolut plans to roll out credit options for businesses this year.
Qonto’s decision to pursue a banking license comes at a time when well-funded competitors are making moves in the market. Revolut, in particular, announced plans to seek a French license and establish Paris as its Western Europe headquarters. Despite the competitive landscape, Prot emphasized that Qonto’s timing was driven by achieving profitability ahead of schedule in 2023.
As the son of former BNP Paribas President Baudouin Prot, Qonto’s CEO has a deep understanding of the banking industry. The company has made strategic acquisitions, including taking over its German competitor Penta and acquiring the financial automation platform Regate. These acquisitions reflect Qonto’s positioning as an integrated finance management solution beyond traditional banking services.
Qonto’s growth in the B2B segment across Europe has been significant, with Germany emerging as its largest market after France. The company’s expansion into Spain, Italy, Austria, Belgium, the Netherlands, and Portugal further solidifies its presence in the European market.
Prot acknowledges that some customers may prefer Qonto to be a credit institution for additional deposit guarantees and access to credit options. The company’s Pay Later service, launched in 2024, has already facilitated €50 million in financing but is limited by its current license.
By becoming a credit institution, Qonto aims to unlock new revenue streams and reduce its reliance on third-party partners. The company’s focus on enhancing its banking infrastructure, risk management teams, and product development signals a mature approach to its growth strategy.
While the journey to obtaining a banking license may be lengthy, Qonto is committed to working closely with France’s banking supervisor to navigate the process. The company’s recent additions to its board of directors and focus on regulatory compliance demonstrate its readiness to take the next step in its evolution.
