Revolut, which hit the milestone of 50 million customers globally earlier this month, has become the most downloaded financial app in Europe since its launch in 2015. However, Joe Heneghan, CEO of Revolut Europe, pointed out that the fintech sector in Europe continues to face significant hurdles due to fragmented regulations, particularly when it comes to cross-border payments.
Heneghan explained that while the company has grown rapidly, the lack of regulatory consistency across European countries remains a major challenge. “Different countries have their own local laws, which creates a headache for businesses trying to expand and operate seamlessly across borders,” he said in an interview with Euronews at an event in London. He stressed that these regulatory barriers are preventing European fintech companies from emerging as global leaders.
Although Revolut has made strides in offering services like fast and inexpensive international money transfers, the company still faces challenges with cross-border payments. Revolut’s offering of competitive exchange rates and fee-free transactions within the SEPA (Single Euro Payments Area) region, which includes EU countries and a few non-EU states, has set it apart from traditional banks. However, the company still struggles with regulatory barriers that hinder its ability to grow across the region.
One key issue Heneghan highlighted is IBAN discrimination, where businesses or employers refuse to accept IBANs from outside their country, even though such practices are prohibited within the SEPA zone. Customers who use Revolut often have Lithuanian IBANs, as the company operates under a Lithuanian banking license. To address this, Revolut has been expanding by opening local branches in various EU markets, enabling it to offer local IBANs at added cost.
Heneghan’s concerns echo recent remarks by Mario Draghi, former Prime Minister of Italy, who called for greater regulatory unity in Europe to enhance the region’s competitiveness. Draghi’s report emphasized the importance of completing the Capital Markets Union (CMU) and advancing the digital euro, both of which could help strengthen Europe’s financial sector.
While some might view the digital euro as a competitor, Heneghan sees it as an opportunity. “It’s another service we’d look to integrate into our offerings for customers,” he explained. Revolut’s Chief Growth and Marketing Officer, Antoine Le Nel, also noted that the digital euro would not negatively impact Revolut’s business, adding that the company continues to inspire both traditional banks and fintech firms.
Revolut also announced new developments at the London event, including plans to launch mortgage products in Lithuania, Ireland, and France in 2025, as well as business lending offerings for next year. The company is also focused on expanding its banking licenses and has its sights set on obtaining a US banking license. Heneghan confirmed that Revolut aims to secure banking licenses in every market it operates in.
Revolut’s CEO, Nik Storonsky, recently acknowledged that scaling the company without banking licenses was a mistake. Despite these challenges, Revolut continues to be a dominant player in the neobank sector, with a valuation of $45 billion (€43.19 billion) following a share sale in August.