It’s hard to believe that fintech startup Revolut still doesn’t have a proper banking license. Many users will tell you that Revolut’s electronic wallets already feel like traditional bank accounts with an IBAN and a payment card. But the startup is finally applying for a proper banking license in Lithuania.
This process is going to take a few months — the startup expects to get its license at some point during the first half of 2018. But if the company manages to convince the Bank of Lithuania that it deserves a banking license, Revolut will be able to offer credit and deposit services across the European Union thanks to the banking passport system. In other words, Revolut will become a bank.
Revolut accounts will also be covered under the European Deposit Protection scheme. If Revolut shuts down, it means that the European Union will cover your funds and pay you back up to €100,000 per user.
But, as N26 co-founder and CEO Valentin Stalf told me last week, “there's a difference between getting your banking license and migrating everything to your own platform.”
Revolut doesn't plan to start over from scratch. It will keep issuing prepaid cards and electronic wallets — it won’t re-issue new debit cards for existing customers. The company just plans to add new features on top of existing features.
The company also wants to reduce reliance on third-party companies. That’s why Revolut is also building its own payment processor. As TechCrunch's Steve O'Hear wrote earlier this week, prepaid users tend to be more expensive than traditional current accounts.
In the short term, Revolut will ask existing customers if they want to treat electronic money balance as a bank deposit in order to protect it under the European Deposit Protection scheme. After that, you can expect overdrafts as well as new credit and savings features.
In addition to today’s news, Revolut has shared updated metrics. The company now has 950,000 users, manages 16,000 business accounts and has handled $6 billion in transaction volume ever since it started. Three non-executive directors and finance experts are also joining the company to help when it comes to prudential oversight.
So let’s recap a bit. Monzo just raised $93 million. N26 just announced that it would launch in the U.S. and the U.K. next year. And now Revolut is getting a banking license. Challenger banks are all iterating at a rapid pace and fighting each other like there’s no tomorrow.
This article originally appeared on TechCrunch.