French business banking unicorn Qonto has applied for a banking licence in France in a move to offer broader lending, investment and savings services to customers.
The announcement was anticipated, with Qonto CEO Alexandre Prot recently telling the Sifted Podcast the company would apply for a banking licence within the year.
At €4.4bn Qonto is one of French tech’s most highly-valued tech companies, having raised more than €600m from high-profile investors like DST Global and Tiger Global. The scaleup offers business accounts for small and medium enterprises (SMEs) and freelancers to help them manage all things finance, from paying and getting paid to overseeing expenses, cash flow and bookkeeping.
Qonto says it now serves 600k customers across eight European markets — France, Germany, Italy, Spain, the Netherlands, Belgium, Portugal, and Austria. It reached profitability in 2023; and, although Prot declined to confirm exact revenue numbers, he said in 2024 the business experienced 30% growth year-on-year.
“The next step was the banking licence to strengthen what we do on financing, investments and savings,” Prot said during a press conference. “We are financially robust and can become a bank. […] Now feels like the right time to get this licence.”
What will the licence change for Qonto?
Qonto is currently a payments institution, meaning it can only offer limited banking services using its own funds, such as invoice financing of up to €30k and for less than 12 months.
As a bank, the company will be able to leverage customer deposits to finance credit lines to other customers, meaning it can offer longer-term, higher-value loans, savings and investment products. It also means Qonto won’t need to rely on banking partners for some of the services it already offers.
Becoming a regulated bank, however, comes with constraints, including high capital requirements. In 2019, Qonto came close to opening a banking subsidiary, but the plan was dropped because regulations required freezing around €100m to ensure the company remained solvent — money that investors expected to invest in growth.
“We’re a profitable company today, and being profitable enables us to generate regulatory capital,” Prot said during the press conference. “In the past, as we were not profitable, we would have needed a very large fundraise just for that, and we didn’t think that was the best thing to do.”
Other operational constraints will arise once Qonto becomes a fully licenced bank, including mandatory reporting. “As a 1,600-people company active in eight markets […] very clean accounting, data, audits and internal controls are already part of our lives, so it’s just one step further,” said Prot.
Prot expects the licence to significantly boost the company’s finances. “We believe we’ll be more profitable as a bank than as a payments institution,” he said. “We’ll be able to have more customers and serve them even better, be more agile and flexible, and not depend on third-party partners.”
Qonto expects it will be a few years before it is granted the licence. The company aims to reach 2m customers by 2030.
Read the orginal article: https://sifted.eu/articles/qonto-banking-licence-france/
