European Central Bank temporarily curbed permission for Revolut to release new products in the European Economic Area last summer – Financial Times

The European Central Bank has moved to rein in Revolut’s rapid expansion across the continent, fearful that the super-app’s growth is outpacing its internal controls. The restriction specifically targets Revolut’s ability to introduce new services within the EEA, temporarily barring the firm’s Lithuanian banking arm from launching new products. Revolut can keep operating its existing products, but the conveyor belt of new offerings is paused until regulators are satisfied that the company’s internal plumbing can handle the pressure.

The European Central Bank moved to rein in Revolut’s operations last year, placing increased restrictions on the European arm of the continent’s most valuable fintech due to concerns over how the company rapidly approved new financial products – Financial Times reports.

The ECB temporarily curbed permission for the UK-based bank’s European division to release new products in the European Economic Area last summer, according to people familiar with the matter, until it had rectified “deficiencies” in approval processes. Revolut was ordered to conduct a third-party review of its risk, compliance and legal functions governing new product launches in Europe.

The restrictions were even tighter outside the bloc for Revolut’s European arm, preventing it from making acquisitions or bringing on new customers beyond the continent.

The restrictions, which have not been disclosed or reported before, posed a threat to the strategy of Revolut’s Russian-born co-founder and chief executive Nik Storonsky, who has lauded staff as “self-guided missiles” given the freedom to rapidly develop and launch products with only limited oversight.

The ECB restrictions underline the tensions between fast-growing fintechs, and their disruptive effect on traditional banking, and the regulators tasked with protecting consumers and limiting risks to the wider financial system.

There are also longstanding questions over Europe’s ability to foster start-up champions compared with the US, with fears the regulatory environment stifles growth and innovation.

A person close to the company said that since last summer Revolut had improved its internal product launch process, with enhanced reviews of new initiatives by internal experts. 

The FT could not establish if all the restrictions had been lifted or if some remained in place, but over the past year Revolut has launched a range of products — including mortgages, teen accounts and branches — across Europe, and grown its customer base.