For a long time, fintech companies liked to position themselves as the alternative, something different from traditional banks, not a part of the same system. Not banks, but better. Faster onboarding, cleaner apps, fewer fees, financial services stripped of the baggage that traditional institutions had accumulated over decades.
They did not need banking licences. Instead, they built on top of banks, quietly plugging into the system while presenting a very different face to customers. But now that model is changing.
After years of back-and-forth with regulators, Revolut finally getting its UK banking licence feels like more than just a company milestone. It’s a sign of where the industry is heading. Fintechs are no longer happy sitting in the middle. They want to run the whole show, as banks themselves.
But this is not a simple story of disruption. Nor is it a clean, linear shift. It is, as some experts suggest, something more uneven, more conditional and, perhaps, more fragile than it first appears.
Inside the numbers
To really get a sense of how big this shift is, you just have to look at what companies like Revolut are doing today.
It is no longer just a payments app. Over time, it has quietly expanded into savings, currency exchange, stock and crypto trading, and now even lending. It operates across Europe, the UK, the US, and parts of Asia-Pacific, less like a regional player and more like a global financial platform in the making.
The scale is hard to ignore. Revolut says it has around 70 million customers worldwide, with about 13 million in the UK alone. That’s massive for a company that, not too long ago, wasn’t even a bank.
Traditional banks have noticed. Over the years, many have either partnered with fintechs or invested in them, not just to compete, but to stay relevant as the industry evolves.
At the same time, more fintechs are going all in. Players like Monzo and Starling Bank in the UK, N26 in Europe, SoFi in the US, and Nubank in Latin America have already secured banking licences. This isn’t happening in one market; it is happening everywhere.
Even traditional banks are not just sitting back. Big names like JPMorgan Chase and DBS Bank are putting serious effort into digital and AI. They are starting to feel a lot more like fintechs than old-school banks.
When you step back and look at it, the gap really isn’t what it used to be. Fintechs and banks are slowly meeting somewhere in the middle.
Not a shift, but a wave
For Ron Shevlin, Chief Research Officer at Cornerstone Advisors, one of the United States’ leading independent investment consulting firms, the narrative of a sweeping transformation may be overstated.
“It’s more a wave than a shift,” he told International Finance, pointing to the influence of regulatory cycles. In his view, the current momentum is tied in part to a more accommodating political and regulatory environment, one that could easily change.
“The ‘wave’ will subside with the next change in the White House,” he said.
This framing matters. It suggests that the move toward banking licences is not inevitable, but contingent, shaped by external conditions as much as by internal strategy. Still, even a wave has direction. The direction, at least for now, is clear.
Limits of the partner-bank model
In order to understand why fintechs are moving toward licences, it helps to look at how they started.
In the early days, most fintechs did not bother becoming banks. They simply teamed up with licenced institutions, more or less ‘borrowing’ their infrastructure to get going. It helped them move fast, skip the heavy regulatory burden, and focus on building a smooth user experience.
“The partner bank model was always a workaround. A way to access banking infrastructure without the regulatory overhead. It was fine for early-stage fintechs that needed to move fast,” Shevlin explains.
But as these companies scaled, the limitations became harder to ignore.
Relying on sponsor banks, often smaller institutions, introduced friction. Product development could be constrained. Strategic flexibility could be limited. Most importantly, control was never fully in the fintech’s hands.
“If a sponsor bank changes its risk appetite, or gets acquired, or gets regulatory heat, the fintech suffers,” Shevlin notes.
In other words, the very structure that enabled rapid growth can become a bottleneck at scale.
The economics of becoming a bank
Beyond control, there is a more fundamental driver, which is ‘money’.
“Why now?” Shevlin explains: “Two reasons: the regulatory environment and profitability.”
At the heart of this is lending.
“The profits in banking come from lending. Without a licence, you cannot lend,” Shevlin noted.
This is a critical point. Many fintechs built their businesses around payments, earning revenue from interchange fees or subscriptions. But these revenue streams have limits. Margins are thin. Competition is intense.
A banking licence changes the equation. It basically changes the game for fintechs.
They can raise cheaper funds by holding deposits, move into lending products like loans and credit cards, keep more of the revenue instead of sharing it, and plug directly into payment systems. This isn’t a small upgrade; it fundamentally reshapes how their business works.
From fintech to bank
If the economics explain the ‘why’, the evolution of the industry explains the ‘how’.
According to Chris Skinner, CEO of The Finanser, the shift toward licences is particularly evident among neobanks.
“You cannot put all fintechs in the same bracket. But those who are neobanks, light banking services, have all started moving into getting banking licences in the past few years,” he told International Finance.
This distinction is important. Not all fintechs want to be banks. Payment specialists, infrastructure providers, and enterprise platforms may continue to operate through partnerships.
But for neobanks, companies that already resemble banks in everything but regulation, the move toward licences feels like a natural progression. As they make that transition, the line between fintech and traditional banking begins to blur.
“Totally,” Skinner says when asked whether the distinction is disappearing.
“There are many fintechs that are no longer fintechs. They are banks,” he added.
He cites Monzo and Starling Bank.
A changing competitive landscape
This blurring of boundaries has significant implications for competition. For years, traditional banks dismissed fintechs as niche players, useful for innovation, perhaps, but not a serious threat to core business lines. That view is becoming harder to sustain.
“It has been a slow burn,” Skinner observes, citing data suggesting that a growing share of traditional banking services is shifting toward fintech providers.
The trend is expected to accelerate in the coming years. The scale is already substantial.
For example, Revolut has millions of customers in the UK alone, and tens of millions globally. If even a fraction of those users transition to full banking relationships, the impact could be significant.
For traditional institutions like HSBC or Barclays, this is not just a competitive challenge; it is a structural one.
Technology as a differentiator
One reason fintech banks may be well-positioned to compete is technology. Traditional banks, in many cases, still operate on legacy systems built decades ago, long before the internet, let alone mobile or cloud computing. Fintechs, by contrast, started from scratch.
“The critical thing about neobanks is that they began with no legacy infrastructure. The new banks built theirs specifically to leverage today’s technologies,” Skinner explains.
This gives them an edge in areas such as user experience, product development speed, data analytics, and integration with emerging technologies like AI.
As the industry enters what Skinner describes as ‘another big change with AI’, this technological foundation could become even more important.
“The new banks have far more ability to use intelligence,” he said.
Regulation: Supportive or cautious?
If tech and money are pushing fintechs toward licences, regulation is the one thing that can still slow things down, or change the direction.
On one hand, there are signs of support. Regulators in markets like the UK have actively encouraged innovation, creating frameworks that allow fintechs to experiment and grow.
“Regulators are now pretty comfortable with fintechs. In fact, they want to encourage more innovation in finance,” Skinner said.
On the other hand, the relationship is not without tension. Things like KYC checks have actually become a sticking point, especially for fintechs trying to move from simple payments or prepaid models into full-fledged banking. Customers who signed up with minimal documentation may suddenly be required to provide detailed identification, leading, in some cases, to account closures and dissatisfaction.
At a broader level, regulatory attitudes can shift with political cycles.
“It’s a back-and-forth thing,” Shevlin notes, particularly in the US context. This creates uncertainty. What looks like a supportive environment today may not remain so tomorrow.
Do Customers Even Care?
Amid all this discussion of licences, regulation, and strategy, there is a simpler question: does it matter to customers?
Shevlin offers a blunt perspective: “Americans do not really care if a fintech has a charter or not, until that fintech fails.”
It is a reminder that, for most users, the appeal of fintech lies in experience, ease of use, transparency, and convenience. Regulatory status is largely invisible, at least until something goes wrong.
This creates an interesting dynamic. Fintechs may pursue licences for economic and strategic reasons, but the customer-facing narrative may not change much. At least, not immediately.
Not all fintechs will follow
Despite the momentum, not every fintech will or should become a bank.
“There are different paths,” Skinner says.
For example, companies like Stripe, Adyen, and Airwallex focus on payments and financial infrastructure, often in partnership with banks. For these firms, a banking licence may offer limited additional value relative to the complexity it introduces.
Even among neobanks, timing matters.
“Fintechs need to scale to a certain point before the economics make sense,” Shevlin argues, suggesting that pursuing a licence too early can be risky.
Historically, obtaining a licence has been a lengthy and expensive process, one that requires significant resources and regulatory engagement. The current environment, with faster approval cycles, may not last.
Toward a new banking landscape
Both Shevlin and Skinner see a landscape in flux, but not necessarily one that follows a single trajectory. For Skinner, the long-term vision is expansive.
“The landscape of 2035 is one where many fintechs have worked together to build a new world of global banking. It’s a brave new world,” he said.
In this vision, the dominance of traditional banks could give way to a more diverse ecosystem, one that includes global digital banks, regional challengers, and specialised fintech platforms.
For Shevlin, it is a bit more measured. This wave of fintechs chasing licences may continue for now, but it won’t be steady or last forever.
What really comes through is that this isn’t a simple disruption story. Fintechs aren’t just trying to replace banks anymore. In many cases, they are becoming them. But it is not a straight path. It is shaped by regulation, economics, timing, and all of it. Getting a licence opens doors, but it also brings new pressures.
More than anything, it shows a mindset shift. Fintechs are no longer operating outside the system; they are stepping right into it. Whether that truly reshapes banking is still an open question.
For now, what is clear is that the boundaries are changing. And in finance, as in many industries, when boundaries shift, everything else tends to follow.