Revolut, which reached 50 million customers globally earlier this month, continues to lead as Europe’s most downloaded financial app since its launch in 2015. However, the company’s CEO for Europe, Joe Heneghan, emphasized that the rapid growth of fintechs in the region is being held back by fragmented regulations, particularly when it comes to cross-border payments.
Heneghan explained that the varying laws across different European countries create significant challenges for fintech companies looking to scale beyond national borders. “In each country, you encounter different local laws, and that’s a real challenge for companies trying to be successful in one market and expand into others,” he said during an event in London hosted by Revolut. He pointed out that these regulatory inconsistencies prevent the emergence of “European champions” in the global fintech space.
Despite these obstacles, Revolut has made notable strides in offering a variety of services, with its international money transfers being a standout feature. Revolut offers competitive exchange rates and does not charge fees for transactions within the SEPA (Single Euro Payments Area) region, which includes EU member states as well as a few additional countries like Iceland, Switzerland, and the United Kingdom.
However, Heneghan highlighted that challenges remain, particularly with IBAN discrimination. This issue arises when companies or employers refuse to accept IBANs from foreign banks, even though it is illegal within the SEPA zone. Many Revolut users, for example, have Lithuanian IBANs because the company operates under a Lithuanian banking license. To address this, Revolut has been expanding its operations by setting up local branches in various EU countries, allowing the firm to issue local IBANs—but this expansion comes at a cost.
Heneghan’s comments resonate with the recent recommendations from Mario Draghi, former Prime Minister of Italy, who called for more regulatory unity within Europe to help strengthen its competitiveness on the global stage. Draghi also emphasized the importance of completing the Capital Markets Union (CMU) and the rollout of the digital euro, both of which could improve Europe’s financial infrastructure.
While some might see the digital euro as competition, Heneghan views it as an opportunity. “It’s another service we would look to integrate and offer to our customers,” he explained. Revolut’s Chief Growth and Marketing Officer, Antoine Le Nel, also stated that the digital euro would not pose a threat to Revolut’s services. Instead, he believes the company’s offerings continue to inspire both traditional financial institutions and fintech competitors.
At the same event, Revolut revealed its plans to launch mortgage products in Lithuania, Ireland, and France by 2025, along with business lending services next year. The company also has its sights set on expanding its banking licenses, with plans to apply for a banking license in the US. Heneghan confirmed that Revolut is committed to obtaining a banking license in every country where it operates.
Revolut’s CEO, Nik Storonsky, also acknowledged at a recent event that the company’s earlier approach of scaling without banking licenses was a mistake. Despite these regulatory challenges, Revolut remains a major player in the neobank sector, with a valuation of $45 billion (€43.19 billion) following a share sale in August.
