Cashplus, a digital-only banking provider, has become the latest fintech to secure a UK banking licence.

That makes it the newest “official” challenger bank, despite the company now being 15 years old, and among London’s first digital banking alternatives.

Like other digital banks, Cashplus offers prepaid Mastercards and current accounts to micro-businesses, as well as a growing pool of retail consumers.

Its new status as a UK bank comes as fintech giant Revolut begins its own quest for a licence — a process that has proven challenging. 

One of Cashplus’ main assets is that — unlike most well-known digital banks — it is profitable, having made a small operating profit for nine consecutive years.

Last year, the company generated £50m in revenue. Around half of this came from its business arm, which currently counts around 150,000 clients, while the remainder came from its consumer-facing services.

The company says its new licence will enable it to offer a wider range of products, including cheaper lending. In its previous status as an emoney institution, Cashplus had to safeguard its £500m in users deposits, whereas now it has permission to lend a portion of them out.

“Cashplus has reached this milestone at the moment when UK small businesses need us most,” says Rich Wagner, Cashplus’ founder and CEO.

Wagner added that as a new bank, Cashplus wants to help bolster support for businesses as the economic repercussions of the pandemic bite.

“While big banks are slamming the door shut, we’ll be welcoming customers, opening up lending and delivering enhanced products to support them through the challenging months ahead.”

The journey to get banked

Cashplus’ journey to becoming a bank has taken roughly three years — a process it says took longer than others because it was more established than most applicants are at the point at which they apply, meaning there was more data for the regulator to check. 

Securing a licence can be tricky — official data shows that between 2013 and 2019, just 31 companies out of 110 candidates were given the green light to even apply for one. 

Earlier in January, Revolut announced that it had been invited to apply for its licence — a process that involved months of “pre-application” meetings and several big hires.

The company has a European banking licence, granted by the Bank of Lithuania in 2018, but operates as an FCA authorised e-money company in the UK. Rival fintechs Starling and Monzo both secured their bank licences several years ago as nascent startups.

Freya Pratty is Sifted’s news reporter. She tweets from @FPratty