Dutch digital bank Bunq is seeking to obtain a banking license from UK financial regulators in the hopes of reentering the UK market. The firm initially launched in the UK in 2019 but had to exit due to Brexit regulations that prevented EU-based financial institutions from operating in the UK without a separate license. Bunq currently holds a banking license with the Dutch central bank and is now looking to secure a license from the UK’s Financial Conduct Authority to tap into the large and underserved market of British digital nomads, estimated at 2.8 million individuals. However, the process of obtaining a banking license in the UK is challenging, with even established players like Revolut facing difficulties in securing one.
Reentry into the UK market poses significant challenges for Bunq, as the UK regulatory landscape is different from that of the EU. The UK requires financial institutions to have a separate license to operate in the country post-Brexit, as EU-based authorizations are no longer valid. Bunq’s CEO, Ali Niknam, is hopeful that they will receive a positive response from UK regulators by the end of the year or early next year. This move is part of Bunq’s expansion strategy to reach a broader audience of digital nomads and other customers in the UK market. However, competition is fierce in the UK fintech sector, with players like Monzo and Starling holding their own bank licenses.
Founded in 2012 in Amsterdam by Ali Niknam, Bunq has grown to become one of Europe’s largest neobanks, with 12.5 million users across the continent and deposits of 8 billion euros. The bank was last privately valued at 1.65 billion euros by investors and reported its first full year of profitability in 2023, generating a net profit of 53.1 million euros. Bunq’s success in Europe has allowed it to explore opportunities in other markets, including the United States, where the bank has filed for a U.S. federal bank charter in April 2023. This move reflects Bunq’s ambition to expand its presence globally and cater to a wider customer base beyond Europe.
The expansion into the UK market is crucial for Bunq’s growth strategy, as it seeks to leverage the country’s large population of digital nomads and underserved customers. Obtaining a banking license in the UK will allow Bunq to offer a wider range of services, including loans, which are not permitted under an e-money license. The UK regulator has been responsive to Bunq’s application, and the firm is optimistic about the outcome of the process. While competition in the UK fintech sector is intense, Bunq’s unique offerings, such as its rainbow-colored cards and focus on digital nomads, could help set it apart in the market and attract new customers.
Overall, Bunq’s efforts to secure a banking license in the UK demonstrate the bank’s commitment to expanding its presence in key markets and serving a diverse customer base. With a track record of profitability and a growing user base in Europe, Bunq is well-positioned to make a successful reentry into the UK market and compete with established players in the fintech sector. The firm’s innovative approach to digital banking, coupled with its focus on customer needs and market trends, bodes well for its future growth and success in the global financial industry.
