Revolut shifts US banking strategy from acquisition to direct license application

Revolut has abandoned its long-standing plan to acquire a US-based lender and will instead pursue a direct banking license application, according to Financial Times sources. The UK fintech giant is betting that a potential second Trump administration would streamline the approval process, contrasting with the Biden administration's more stringent regulatory approach.

The strategic pivot comes after Revolut spent years attempting to establish a US banking presence through acquisition. Previous targets reportedly included community banks and regional lenders, with negotiations failing due to valuation mismatches and regulatory concerns. A banking license would allow Revolut to offer full-service banking products in the US market, including FDIC-insured deposit accounts and lending services, rather than operating solely as a money transfer service through its existing partnership with Metropolitan Commercial Bank.

Regulatory experts note the Office of the Comptroller of the Currency (OCC) approved only three new banking charters during Biden's first term, compared to 14 during Trump's presidency. "The licensing process became notably more rigorous under the current administration, with heightened capital requirements and longer review periods," explained a former OCC official familiar with both regimes. Revolut's decision appears timed to coincide with potential regulatory shifts, though the company hasn't publicly commented on its strategy change.

Practical implications for Revolut include avoiding the integration challenges of merging with an existing bank while gaining full control over its US banking operations. However, the application process remains formidable even under a more permissive administration. Revolut must still demonstrate $100+ million in capital reserves, robust anti-money laundering controls, and sustainable business models across all proposed banking activities. The UK company also faces ongoing scrutiny from the Financial Conduct Authority regarding internal controls, potentially complicating its US approval.

Market observers question whether the strategy shift addresses Revolut's core challenge: establishing profitability in its existing operations. The company lost £25 million in 2023 despite £1.7 billion in revenue, with its US division reportedly contributing minimal profit. A banking license would enable higher-margin lending operations but requires significant infrastructure investment. Competitors like Chime and Current have built substantial US customer bases without banking charters through partner bank models, though they face similar profitability challenges.

The application timeline remains uncertain, with approvals typically taking 12-24 months even under favorable conditions. Revolut's move signals confidence in US market potential despite previous setbacks, including the 2021 withdrawal of its UK banking license application after regulatory delays. Industry analysts suggest Revolut may simultaneously pursue smaller acquisitions to bolster specific capabilities while awaiting license approval.

Revolut's strategic shift reflects the fintech sector's ongoing adaptation to regulatory realities. While the direct license approach offers long-term advantages, it requires navigating complex supervisory frameworks that have proven challenging even for established players. The outcome will test whether regulatory expectations truly shift under changing administrations or whether fundamental banking requirements remain consistent across political cycles.

Revolut's US banking services OCC charter application process