Bunq mulls London IPO as Euro neobank plots Monzo and Revolut UK challenge

European fintech and neobank Bunq has reapplied for a UK payments licence as it looks to capture market share from the likes of Revolut and Monzo ahead of an IPO.

Bunq, Europe’s second largest neobank with eleven million customers, also reported its first full year of profitability on Tuesday, with a net profit of €53.1m (£45.3m) in 2023

The mobile banking firm is geared towards digital nomads – remote workers who travel freely.

Netherlands-based Bunq stopped offering new UK 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 has now submitted an application for an E-Money Institution (EMI) licence to the Financial Conduct Authority (FCA).

If granted, an EMI licence lets fintechs issue services including electronic money, prepaid cards and mobile payments.

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. The jury’s out on that one.

Ali Niknam

EMI licences have much lower capital requirements than a banking license and give smaller firms a way to compete with large incumbents in payment services.

Bunq already has a full European banking licence and has applied for one in the US.

Should it get one in the UK, it will allow bunq to tap into a large market that includes an estimated 2.8 million British digital nomads.

The UK is home to the second-highest number of digital nomads globally.

“We have created a sustainable and durable company that is here to stay,” chief executive Ali Niknam told City A.M.

“I’ve been basically bootstrapping and self-funding it ever since the start, and Bunq is in such a good space now after 11 years of insane hours.”

Bunq is Niknam’s third unicorn. He previously founded web hosting firm TransIP and data centre company The Datacenter Group before launching Bunq in 2012.

Niknam said the firm was not immediately considering applying for a full UK banking licence, like its bigger rival Revolut.

“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 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.”

Niknam’s biggest British rivals are Revolut and Monzo, which have boomed in recent years to become a real threat to the big banks.

“If anything there’s not enough competition between the new players and the old players if you compare it, for example, to the mobile phone industry,” he remarked. “Imagine if that competition took place in the financial sector how much progress would be possible? That’s what I often wonder.”

Bunq differs from its UK peers in that it asks for a subscription fee for its services.

Niknam said the firm has always had a “dream” of IPO-ing eventually.

“The one thing I have not yet done in my entrepreneurial life is an IPO,” he said. “But we will let our timing and our actions be decided by the wants and needs of our users. And at this point in time, I think we’re doing perfectly well.”

Nikham 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. The jury’s out on that one.”

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.

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