The power of licensing for ambitious fintechs
Licensing might seem dull, but for neobanks, it’s anything but. It’s a strategic move that has transformed companies like NuBank and Revolut into multi-billion-dollar powerhouses. In a market driven by innovation, getting licensed in the right regions is often the ticket to unlocking major funding and explosive growth.
A strategic tool for expansion
For fintechs, regulatory approval is a gateway to develop their businesses, Revolut is a perfect example. With four licences under its belt, the company didn’t just expand geographically, it gained access to completely new markets, offering services from crypto trading to insurance. As a result, the British neobank obtained a $45 billion valuation earlier this year.
The link between licensing, valuation, and market fit
Furthermore, by gaining access to a larger pool of potential client’s companies have better opportunities to grow and attract investments. NuBank showcased this with its development in the Brazilian and Mexican markets, recognising an unmet need for digital banking across Latin America. By doing so, its Total Addressable Market (TAM) increased, leading to a $50 billion valuation in 2024.
Building confidence and success
In fintech, trust is everything. Securing licences across jurisdictions signals to investors that your fintech is stable, and capable of competing with traditional financial giants. Wise over the past years followed a similar path, gaining a rapid expansion in highly regulated markets such as Canada and Singapore, signalling to investors that the company had the operation and regulatory competence to grow globally.
Currently, Wise has strengthened its market position, and its valuation grew to more than $8.9 billion by 2023.
Unlocking innovation and services
However, the benefits are not only financial; they also drive product and service innovation. Monzo, used its licence to offer fractional shares, savings accounts, and additional products tailored to the needs of their user base.
Similarly, Tandem Bank entered the eco-finance space, delivering green finance solutions to a growing market of eco-conscious consumers. Securing the right licences allows fintechs to expand their global presence and tap into new opportunities.
In an industry where innovation is the only constant, licensing is the enabler that keeps fintechs like Monzo and Tandem ahead of the curve, allowing them to introduce new offerings that their competitors might not be able to.
Fintech companies like NuBank, Revolut, Wize and Monzo show us that licensing is more than just a box to tick. It’s a powerful tool for growth, helping these companies build trust, expand globally, and attract major funding. For fintech startups, the message is clear: understand your markets, get your licences in order, , and the rest will follow.
