Even though Revolut’s bank charter will be with California, it will allow the lender to operate widely throughout the U.S. via interstate agreements, said an expert who declined to be identified speaking about the start-up’s private plans.
The move from Revolut, valued at $5.5 billion in a February fundraising round, is the latest example of one of a new breed of digital challengers seeking to become a regulated bank. In March, payments giant Square won approval to start a bank. Earlier this year, Lending Club, a fintech pioneer, bought Radius Bank for $185 million in part to gain a national bank charter. Still, its move to apply for a state banking charter rather than one through a national regulator like the Office of the Comptroller of the Currency drew questions from some industry observers. The U.S. financial regulatory regime is large and fragmented, and fintech startups have taken several different approaches to breaking into the market. The most successful so far, like Chime and Current, have simply partnered with existing banks. Meanwhile, state financial regulators have clashed with the OCC over its move to create a special charter for fintech firms. The start-up has already started doing business in the U.S., launching its core digital banking product in March after partnering with Metropolitan Commercial Bank. After a slow start, Revolut is approaching a half million users in the U.S., helped in part by a recent push to offer savers a high interest rate, according to a separate person with knowledge of the firm’s operations. “It’s a huge opportunity for us if we are able to provide all the products that you need in one app, but the app is highly personalized to your needs,” Revolut CEO Nikolay Storonsky said in a July phone interview.