Dutch digital bank Bunq is facing a significant challenge in securing a banking license from U.K. financial regulators. The firm’s CEO and founder, Ali Niknam, expressed hope that they would be successful in obtaining the license by the end of the year or early next year. However, the process may prove to be more complicated due to the differences in regulatory requirements between the U.K. and Europe.
Bunq initially launched its services in the U.K. in 2019 but was forced to exit the country in late 2020 due to the implications of Brexit. Following the passage of Brexit into law, EU-based financial institutions like Bunq were no longer able to rely on their own country authorizations to operate in the U.K. market. This meant that Bunq could only operate with a banking license from the Dutch central bank, limiting its scope of operations in the U.K.
Currently, Bunq has submitted an application with the Financial Conduct Authority for an electronic money institution license, with the aim of relaunching its services in the U.K. market. The firm sees this as an opportunity to target the large and underserved market of British digital nomads, estimated at around 2.8 million individuals. However, Bunq faces stiff competition from established players like Revolut, which has been trying to secure a U.K. banking license for several years.
Challenges in Obtaining a Banking License
Obtaining a banking license is crucial for Bunq as it would allow the firm to offer loans, a service that is not permitted under an e-money license. While the U.K. regulator has been responsive to Bunq’s application, there is still uncertainty around the timeline for approval. Monzo and Starling are among the few U.K. consumer fintech platforms that currently hold their own bank licenses, highlighting the stringent requirements set by regulators in the country.
Despite the challenges in securing a U.K. banking license, Bunq has demonstrated impressive growth since its inception in 2012. With 12.5 million users across Europe and deposits of 8 billion euros, Bunq has established itself as one of Europe’s largest neobanks. The firm was last valued at 1.65 billion euros by investors and reported its first full year of profitability in 2023, generating 53.1 million euros in net profit.
Conclusion: The Road Ahead for Bunq
In addition to its efforts to reenter the U.K. market, Bunq is also exploring opportunities for expansion in the United States. The firm filed for a U.S. federal bank charter in April 2023, signaling its ambition to grow its presence beyond Europe. While securing a U.K. banking license remains a priority for Bunq, the firm’s track record of growth and profitability provides a strong foundation for its future endeavors in the competitive fintech landscape.