British fintech Revolut has secured a European banking licence from authorities in Lithuania, allowing the pre-paid card provider to start offering current accounts and loans across the EU from early next year.

The London-based company, which was valued at $1.7bn in a fundraising earlier this year, will initially focus on Lithuania, where it has about 150,000 customers, before expanding into larger markets including the UK, France and Poland later next year.

However, its plans to offer full banking services in its home market could be delayed in the event of a disorderly Brexit if financial firms lose the right to serve retail customers on licences granted in the rest of the EU. Revolut said it was preparing to apply for a separate UK banking licence regardless of the outcome of Brexit and has previously said it will also seek a Luxembourg e-money licence.

Revolut was established in 2015 with a focus on travel money and overseas transfers, but has since moved into areas including cryptocurrency trading and savings. The company, which had talked to the Bank of England about applying for a licence before shifting its focus to Lithuania, said its new status as a bank would allow it to add new products including business and consumer loans and overdrafts.

Nikolay Storonsky, Revolut chief executive, said: “Our vision is that retail and business customers will be able to apply for a loan in just two minutes from within the app, and then have the money in their account almost instantly. We’ll remove the bureaucratic process and come in cheaper than traditional lenders.”

The move into lending will put the bank into more direct competition with other online banks and digital upstarts such as the UK’s Monzo and Germany’s N26. However, Mr Storonsky said Revolut had a “broader vision” than its start-up rivals, citing its international expansion and move into businesses such as stock trading.

Valuations of app-based banks have soared this year as investors bet that new groups will disrupt legacy lenders, though they have so far struggled to convert fast-growing user bases into sustainable profits.

Revolut briefly broke even in late 2017 shortly after it started offering cryptocurrency trading at the height of the bitcoin bubble, but fell back into loss this year as it increased investment in new products. Nonetheless, the company said its revenues had increased fivefold in 2018 to more than £60m.

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