Dutch digital bank Bunq is currently in the process of trying to secure a banking license from U.K. financial regulators. The firm’s CEO and founder, Ali Niknam, expressed his optimism about the potential approval timeline, citing differences in regulatory processes between the U.K. and Europe. Despite the challenges posed by Brexit, Bunq is determined to reenter the U.K. market after being forced to exit in late 2020.
The aftermath of Brexit presented significant obstacles for EU-based financial institutions looking to operate in the U.K. market. Bunq, which initially launched in the U.K. in 2019, had to navigate these changes and is now seeking to obtain a banking license from the U.K. regulators. This move is crucial for the bank, as it aims to serve the growing population of digital nomads in the U.K. market, estimated to be around 2.8 million individuals.
Competition and Regulatory Hurdles
Bunq is not alone in its quest for a banking license in the U.K. European fintech rival Revolut has been pursuing the same goal for years, highlighting the challenges associated with obtaining such a license. The distinction between a banking license and an e-money license is an important one, as it determines the scope of financial services that a firm can offer. While an e-money license is a stepping stone, a banking license allows for a broader range of activities, including offering loans.
Despite the regulatory hurdles, Bunq has experienced significant growth since its inception in 2012. With 12.5 million users across Europe and deposits totaling 8 billion euros, the digital bank has positioned itself as one of Europe’s largest neobanks. Moreover, Bunq reported its first full year of profitability in 2023, marking a significant milestone for the company and its investors.
International Expansion Goals
In addition to its U.K. ambitions, Bunq is also eyeing expansion into the United States. The firm has taken steps towards this goal by filing for a U.S. federal bank charter in April 2023. This expansion strategy aligns with the company’s vision of becoming a global player in the digital banking space, tapping into new markets and diversifying its user base.
Bunq’s pursuit of a banking license in the U.K. signifies its commitment to expanding its presence in key markets and serving the evolving needs of digital nomads. While challenges persist in the regulatory landscape, the company’s growth trajectory and profitability milestones reflect its resilience and determination to succeed in an increasingly competitive fintech industry. As Bunq navigates the complexities of obtaining a U.K. banking license, the outcome will not only impact its operations in the U.K. market but also serve as a springboard for further international expansion.