Qonto, the French fintech startup specializing in business banking solutions for freelancers and small to medium-sized enterprises (SMEs), has recently achieved a significant milestone by reaching 600,000 customers across Europe. In a strategic move to enhance its service offerings, Qonto has applied for a banking license in France, as announced by CEO Alexandre Prot.
Current Licensing and Service Limitations
Since obtaining a payment institution license in 2018, Qonto has been able to offer a range of financial services, including a form of buy now, pay later (BNPL) options. However, this license restricts the company’s ability to provide comprehensive banking services such as extensive lending, savings accounts, and investment products. Acquiring a credit institution license would enable Qonto to expand its offerings, aligning with its goal to serve 2 million customers by 2030.
Competitive Landscape and Strategic Timing
The fintech sector is witnessing varied approaches to licensing among competitors. Memo Bank, for instance, was established with a full banking license and offers lending services to SMEs. Finom operates under an electronic money institution (EMI) license and has recently begun testing lending services permitted under this framework. Revolut holds a full Lithuanian banking license but has yet to introduce business credit options, though plans are underway for this year. Notably, Revolut has announced intentions to seek a French banking license and establish Paris as its Western European headquarters.
Qonto’s decision to apply for a banking license is timely, especially after achieving profitability ahead of schedule in 2023. This financial stability positions the company to pursue the license without the need for additional fundraising beyond the $552 million secured in 2022 at a $5 billion valuation.
Historical Considerations and Financial Strategy
CEO Alexandre Prot, son of former BNP Paribas President Baudouin Prot, revealed that the idea of obtaining a credit license had been considered previously but was deferred due to the anticipated time and financial resources required. With the company now profitable, this strategic move is more feasible and aligns with Qonto’s long-term objectives.
Acquisitions and Market Expansion
Qonto has actively pursued growth through acquisitions, including the takeover of German competitor Penta in 2022 and the acquisition of accounting and financial automation platform Regate in 2024. These moves have bolstered Qonto’s position in the European market, with Germany now being its largest market after France, followed by Spain and Italy. The company has also expanded into Austria, Belgium, the Netherlands, and Portugal.
Customer Demand and Credit Services
The demand for credit services among Qonto’s customer base is evident. The company’s Pay Later service, launched in 2024, has already facilitated €50 million in financing. However, the current license limits the scope of these offerings, both in terms of the company’s ability to lend from its own equity and the duration of loans available to customers.
To address this, Qonto has established a financing hub in collaboration with fintech partners such as Defacto, Karmen, Riverbank, and Silvr. While this initiative provides customers with access to various loan options, obtaining a credit institution license would allow Qonto to offer more comprehensive and independent credit services.
Revenue Growth and Product Development
Becoming a credit institution would open new revenue streams for Qonto, including margins on credits and increased returns from deposits used for lending. The company reported a 30% increase in revenue over the past year, indicating strong financial health. Additionally, Qonto has developed an in-house card processor to improve acceptance rates and reduce reliance on third-party providers.
Regulatory Process and Future Outlook
The process of obtaining a banking license involves close collaboration with France’s banking supervisor and may take several years. In preparation, Qonto has enhanced its banking infrastructure and risk management teams and added senior profiles to its board of directors. These steps not only support the licensing process but also lay the groundwork for potential future developments, such as an initial public offering (IPO).
In summary, Qonto’s application for a French banking license marks a pivotal step in its mission to provide comprehensive financial solutions to European SMEs and freelancers. By expanding its service offerings and strengthening its market position, Qonto aims to achieve its ambitious goal of serving 2 million customers by 2030.
