Bank of England Governor Andrew Bailey has clarified that there is no rift between the U.K. government and the central bank regarding the delays in granting fintech giant Revolut’s bank license. The Financial Times reported last week that a meeting scheduled between British Finance Minister Rachel Reeves, Revolut, and the Prudential Regulation Authority (PRA) was canceled after Bailey’s intervention.
Authorizing Revolut as a fully licensed bank has become a priority for the U.K. government, especially amidst challenges to tax changes affecting the wealthy. Bailey denied any strained relations between the BOE and Treasury, emphasizing the strong collaboration between the two entities.
While Bailey refrained from commenting extensively on Revolut’s case, he mentioned that the PRA is actively engaging with the digital banking startup during its mobilization phase. Revolut secured a banking license with restrictions in July 2024 after a lengthy application process that began in 2021. This milestone marked the beginning of the mobilization phase, where firms are limited to holding a specific amount of customer deposits.
Despite the progress, Revolut customers in the U.K. are still serviced by the company’s e-money unit, lacking direct insurance protection from the Financial Services Compensation Scheme. Delays in Revolut’s licensing have sparked criticism from the tech industry, urging the government to bolster the country’s competitiveness against global counterparts.
Bailey emphasized the importance of balancing financial stability and economic growth, hinting at potential rule changes to support the flourishing fintech sector. He expressed openness to adapting regulations where necessary to foster innovation and competitiveness.
Overall, the dialogue between regulatory bodies and fintech players like Revolut underscores the evolving landscape of the financial industry, with a focus on fostering innovation while maintaining market stability. The collaborative efforts between government entities and industry players will be crucial in shaping the future of banking and financial services in the U.K.
