Revolut’s UK Case Highlights Gap Between Innovation and Regulation

Revolut’s UK Case Highlights Gap Between Innovation and Regulation
Revolut

Revolut’s meteoric rise to over 65 million users across 38 markets underscores how digital-first banks are reshaping global finance, according to GlobalData. However, the neobank’s wait for a full UK banking license exposes a deeper challenge: how regulators adapt legacy frameworks to fast-scaling fintechs. The Prudential Regulation Authority’s (PRA) caution reflects a broader tension between safeguarding financial stability and enabling digital banking innovation.

The digital bank’s appeal is clear: seamless international banking, competitive FX rates, crypto and stock trading, budgeting tools, and instant payments, all delivered through a slick, app-first interface. For modern consumers, Revolut isn’t just convenient; it feels built for the way people live today. Yet, despite its global footprint, Revolut is still waiting for full UK banking certification. The PRA is reportedly holding up approval over concerns that the company’s risk controls may struggle to keep pace with its rapid overseas expansion. This is an unusually high bar, and for good reason.

“Unlike traditional banks, which grew incrementally over decades with local branches and sequential market entry, Revolut has scaled 5,000% in a few years, operating simultaneously across dozens of countries. This is “hard mode” for regulators. The PRA’s frameworks were not built for a bank operating at this speed and scale,” said Joanne Kumire, Lead Analyst for Banking and Payments at GlobalData.

A full UK banking license would allow Revolut to take deposits and lend fully under UK regulation; offer expanded products with deposit protection under the FSCS; and compete on a level playing field with legacy banks at home. But risk management in a digital-first, global bank looks very different from that in a branch-based bank. Traditional banks rely on decades of operational history, local compliance teams, and relatively predictable transaction volumes. Revolut relies on API-driven compliance, real-time monitoring, and high-velocity transactions across multiple jurisdictions. Both approaches aim for the same goal, financial stability, but they manifest differently.

This raises a bigger question: how should regulators measure risk in a world of global-first digital banks? If oversight metrics are based solely on legacy frameworks, delays are inevitable. But a recalibrated approach, measuring systemic risk, technology resilience, and real-time controls, could accelerate approvals without compromising safety. “The stakes are high. While delays risk market position, the PRA must also ensure that the UK doesn’t become the site of a systemic failure. Revolut isn’t a startup testing the waters; it’s a global institution asking the UK to catch up. How the PRA responds could define not only Revolut’s trajectory but the future of digital banking regulation itself,” concluded Kumire.