Nikolay Storonsky, once a championship swimmer in his native Russia, doesn’t like to hang around in the slow lane. His $33 billion fintech Revolut Inc. has a neon sign in the office telling staff to “Get Shit Done.”

It was in this spirit that the 37-year-old buttonholed U.K. Chancellor of the Exchequer Rishi Sunak at a London event in February. Revolut has applied for a British banking license, a crucial step in its plan to become a globe-spanning financial “superapp.” It already offers money transfers, store purchases, share trading and pet insurance. A license would add protected U.K. current accounts with overdrafts and loans, the backbone of any grownup bank.

But first the Brits want to be sure Revolut has the compliance and risk-management capabilities to avoid the stumbles of other finance “disruptors,” especially as it works with cryptocurrencies. A frustrated Storonsky, who’d hoped to get a license by the start of 2022, asked Sunak what was taking so long, according to people present: Three months later approval still hasn’t arrived. A new vigilance around any Russian-linked businesses hasn’t helped.

Revolut’s rise has been rapid. It launched in 2015 as a prepaid card offering cheap foreign-exchange fees, with Storonsky — a former derivatives trader at Credit Suisse Group AG and Lehman Brothers — handing out freebies at railway stations. Today it has more than 18 million customers and a higher valuation than Barclays Plc. A funding round last year, led by SoftBank Group Corp.’s Vision Fund 2, briefly made it Britain’s most valuable startup ever.

Now, the U.K. process means Storonsky is having to tread water in his attempt to make Revolut the everything store of internet banking. He wants a U.S. license, too, though a person familiar says the Americans are unlikely to oblige until the British situation’s resolved. Revolut’s U.S. boss quit in December in part because of the delay.

There’s a huge amount at stake. While Revolut does have a license for the European Union, the U.K. and U.S. are key territories. Much of its valuation depends on cracking the mainstream banking market globally. Its 2020 revenue was just $325 million so it’s a long way from justifying that $33 billion figure.

And the backdrop isn’t straightforward. The U.K. has concerns about Revolut’s crypto trading service, a big revenue contributor, and whether upstart banking apps are equipped to tackle money launderers and fraud, people familiar say. “We take our regulatory and compliance obligations extremely seriously,” a Revolut spokesman says. “We have constructive, productive relationships with over 22 regulators around the world and … our relationships with U.K. regulators are among the most long-standing.”

Vladimir Putin’s war on Ukraine also brings attention to any Russian ties, no matter how loose. “We’re not in normal circumstances,” says Maria Demertzis, of the Brussels think tank Bruegel, who’s researched the fintech industry.

Russian Distance

Storonsky moved to London at 20, made his billions from setting up his business there and he’s been unequivocal in condemning the war. Revolut cofounder Vlad Yatsenko is Ukrainian; both he and Storonsky have British passports. They’re closing the company’s Moscow office, according to a person familiar with the plan.

Yet Putin’s invasion makes Western politicians cautious. Storonsky’s Ukraine-born father, Nikolay Mironovich Storonsky, is a director at Gazprom Promgaz OAO, a division of the Russian gas giant. Regulators have to decide if that’s “a relevant factor,” says Jane Jee, a compliance lawyer for payment companies.

These family roots were first examined in 2019 after Revolut won a banking license in Lithuania, and a lawmaker accused it of being involved with the Kremlin. “We’ve participated in a number of reviews in Lithuania and the committees concluded there were no Russian political connections at Revolut,” its spokesman says.

The fintech is backed by DST Global, a venture capital firm set up by Yuri Milner, Silicon Valley’s wealthiest Russian. He too has distanced himself from Moscow, damning “Russia’s war.” Revolut’s spokesman says there was no Russian money in any of the DST funds that invested in the company.

Other regulatory questions around Revolut appear more important. Its current “e-money” designation in the U.K. means it’s more lightly supervised than a bank, making it nimbler and cheaper to run. But it can’t lend directly and its deposits aren’t protected by state insurance.

It must show the Financial Conduct Authority that it has the right compliance and fraud-busting tools for a fully licensed bank — an expensive and onerous duty. The big lenders spend billions on monitoring transactions and clients. Revolut has about 300 people in its risk and compliance teams.

“Standards are very high to get a banking license in the U.K.,” says Mark Hipperson, who went through the process after cofounding Starling Bank in 2014. “You have to be very thorough in your know-your-customer procedures.” Another British startup, Monument Bank, took three years to get approval. Storonsky first applied in early 2021.

In the meantime, Revolut is using its Lithuanian license as a passport into the EU. It started offering lending and credit products in the Baltic state and Poland in 2020; in January it launched as a bank in 10 other EU nations.

Its Lithuania experience shows some of the challenges for banking apps as they mature. One compliance expert who worked recently at its office there says Revolut’s sanctions controls are strong, but that its no.1 priority is “client friendliness.” That can put the onus on asking for as few details as possible. The Lithuanian central bank has fined the firm over shortcomings in collecting customer information.

Revolut has a “company-wide compliance practice that’s best in class,” the spokesman says.

Bitcoin Blow

In Britain, Revolut’s crypto-trading product has been in focus. The regulator hasn’t deemed it “fit and proper” because of worries about its know-your-customer approach and transaction monitoring, though it’s still available in the U.K. Revolut has indicated frustration at dealing with several different FCA contacts, with crypto discussions having to restart each time, according to a person briefed on the process.

While Sunak champions fintech and speaks of making London a post-Brexit “crypto hub,” this doesn’t chime with the regulatory wariness, some industry executives say. One fintech boss, who asked not to be named, says Revolut’s wait adds to the perception that the Bank of England and FCA’s support for innovation has weakened. The FCA wouldn’t comment on the holdup, but says it welcomes innovation. London is eager to host any Revolut stock market listing.

Official relations with Storonsky haven’t always been easy. In 2019 the FCA objected to his proposal to make a relative unknown Revolut’s chairman. He settled instead on City grandee Martin Gilbert, ex-boss of Aberdeen Asset Management, after angrily telling the regulator to pick who it wanted, people familiar say. Revolut’s boardroom is now home to finance veterans such as Michael Sherwood, a former co-chief of Goldman Sachs International.

Some speak of a new maturity in Storonsky, who’s been criticized before for a toxic and target-obsessed work culture. He’ll need that as he navigates British officialdom. The “finance bro” fans of Revolut’s steel and gold bank cards will be cheering him on.

The potential prize is great. With the superapp concept, “We’re going back to the times when clients had a current account, loan, insurance, all in one place,” says Hipperson, who’s running a new fintech called Ziglu. Customers went cold on this approach in the ‘90s because banks took advantage.

Since its 2015 debut Revolut has raised about $1.7 billion from SoftBank and others. A banker close to the company expects more lavish funding rounds. There’s a lot riding on Storonsky’s success.

–By Stefania Spezzati, William Shaw and Aisha S Gani (Bloomberg Mercury)