Bunq CEO and founder Ali Niknam is optimistic about the digital bank’s chances of acquiring a banking license from UK financial regulators. Despite the uncertainties surrounding the regulatory processes in the UK as compared to Europe, Niknam remains hopeful that Bunq will receive the green light by the end of the year or early next year. The firm’s rainbow-colored cards and emphasis on digital nomads set it apart, making its reentry into the UK market a priority.
The repercussions of Brexit played a significant role in Bunq’s decision to exit the UK market in late 2020. With Brexit in effect, EU-based financial institutions could no longer operate in the UK market using their own country authorizations. This led to Bunq’s withdrawal from the UK, leaving it with only a banking license from the Dutch central bank. However, the firm is now determined to reintroduce itself to the UK market by securing an electronic money institution license from the Financial Conduct Authority.
Competition and Regulatory Hurdles
Entering the UK market poses challenges for Bunq, especially with competitors like Revolut vying for a banking license as well. While an e-money license allows firms to offer digital transactions, a banking license opens the door to providing loans. Companies like Monzo and Starling have successfully obtained bank licenses in the UK, setting a precedent for Bunq’s aspirations. The dialogue with the UK regulator is ongoing, indicating a positive momentum, but the timeline for approval remains uncertain.
Founded in Amsterdam in 2012, Bunq has steadily grown to become one of Europe’s leading neobanks, boasting 12.5 million users across the continent and deposits totaling 8 billion euros. The firm’s valuation by investors stands at 1.65 billion euros, reflecting its significant market presence. Despite the challenges posed by Brexit, Bunq reported a profitable year in 2023, with a net profit of 53.1 million euros. Moreover, the digital bank is eyeing expansion in the United States, evidenced by its application for a US federal bank charter in April 2023.
Bunq’s quest for a UK banking license underscores its commitment to growth and innovation in the digital banking sector. While navigating regulatory hurdles and competition, the firm remains focused on tapping into new markets and expanding its user base. With a strong foundation in Europe and a profitable year under its belt, Bunq is well-positioned to take on the challenges of securing a banking license in the UK and pursuing further growth opportunities globally.