Bunq mulls London IPO as European neobank plots Monzo and Revolut UK challenge
European fintech and neobank Bunq has applied for a UK electronic money institution (EMI) licence as it looks to capture market share from the likes of Revolut and Monzo ahead of a potential IPO.
Bunq, Europe’s second largest neobank with 11m customers, also reported its first full year of bottom-line profitability on Tuesday, with a net profit of €53.1m (£45.2m) in 2023.
The Netherlands-based mobile banking firm stopped offering new accounts in the UK at the end of 2020, citing new regulatory requirements under Brexit.
It still supports UK users acquired before Brexit, unlike German rival N26, which withdrew from the country entirely.
Bunq said that if the Financial Conduct Authority approves its application for an EMI licence, the firm could tap into a “large and underserved” market of some 2.8m British “digital nomads”.
An EMI licence has much lower capital requirements than a full banking licence and gives challenger firms a way to compete with larger incumbents in payment services.
Bunq already has a European banking licence and last April applied for one in the US.
Founder and chief executive Ali Niknam told Morning Wire that his firm was not immediately considering applying for a UK banking licence.
“A lot of the regulation is constantly changing,” he said. “But we have to weigh the overhead of an additional full banking permit against the benefits.
“The EMI licence is a perfect way to start because it caters to EU citizens working and living in the UK, and UK citizens working and living in Europe.”
Bunq is eyeing up a competitive market. Monzo, Starling and Revolut – which is currently seeking a UK banking licence – have boomed in recent years to become serious competition for the big legacy firms.
Niknam previously founded web hosting firm TransIP and data centre company The Datacenter Group before launching Bunq in 2012.
He said the firm has always “dreamed” of a public listing. Bunq achieved unicorn status in 2021 and was most recently valued at €1.65bn last July.
“The one thing I have not yet done in my entrepreneurial life is an IPO,” Niknam said. “But we will let our timing and actions be decided by the wants and needs of our users. And at this point in time, I think we’re doing perfectly well.”
He added: “London could be a consideration. There are some regulatory advantages to being in London, but then there’s also obviously the disadvantage of not being part of a bigger block like the US or the EU.”
Bunq’s gross fee income grew by 20 per cent year-on-year in the fourth quarter, while user deposits rose nearly fourfold to just under €7bn.
“I’ve been basically bootstrapping and self-funding it ever since the start, and Bunq is in such a good place now after 11 years of insane hours,” Niknam said.