The European fintech landscape is witnessing another significant milestone as French startup Qonto has officially applied for a banking license with France's banking regulator. This strategic move represents a pivotal moment for the company as it seeks to transform from a payment services provider into a full-fledged banking institution.
From Payment Provider to Banking Aspirant
Since its launch in July 2017, Qonto has carved out a substantial niche in the European business banking sector, serving over 600,000 business customers across eight European markets including France, Germany, Italy, and Spain. The company has built its reputation by providing digital banking and financial management tools specifically designed for small and medium-sized businesses (SMBs) and freelancers.
Currently operating under a payment institution license obtained in 2018, Qonto offers a comprehensive suite of financial services including invoicing, accounting, card payments, and wire transfers. The company has also ventured into the buy now, pay later (BNPL) space, demonstrating its ambition to expand beyond traditional payment services.
The Strategic Rationale Behind the Banking License
Unlocking New Revenue Streams
CEO and co-founder Alexandre Prot has been transparent about the company's motivations for seeking a banking license. While Qonto achieved profitability ahead of schedule in 2023, the move isn't solely driven by financial considerations. A credit institution license would unlock significant new revenue opportunities through lending margins and better utilization of customer deposits.
Competitive Positioning
The European fintech space has become increasingly competitive, with well-funded players like Revolut making aggressive expansion moves. Revolut recently announced plans to seek a French license and establish Paris as its Western European headquarters. This competitive pressure has likely accelerated Qonto's timeline for pursuing its own banking license.
Customer Demand and Market Validation
Qonto has already validated customer demand for credit services through its Pay Later offering, which facilitated €50 million (approximately $59 million) in financing since its 2024 launch. However, the current payment institution license limits the company's lending capabilities, restricting loans to 12-month terms and requiring the company to lend from its own equity rather than customer deposits.
Ambitious Growth Targets
With its sights set on reaching 2 million customers by 2030, Qonto recognizes that a banking license is essential for achieving this ambitious goal. The company believes that some potential customers won't choose Qonto unless it offers the additional deposit guarantees and comprehensive credit options that come with full banking status.
The numbers support this growth trajectory. Germany has already become Qonto's largest market after France, with Spain and Italy following close behind. The company's recent expansion into Austria, Belgium, the Netherlands, and Portugal in late 2024 demonstrates its continued European ambitions.
Building Banking Infrastructure
Qonto isn't entering the banking license application process unprepared. The company has been systematically building its banking infrastructure, including:
- Enhanced Risk Management: Developing robust risk management teams to demonstrate readiness to France's banking supervisor
- In-House Card Processing: Recently built an in-house card processor to increase acceptance rates while reducing reliance on third parties
- Board Expertise: Added several senior profiles to its board of directors, including former UniCredit CEO Jean-Pierre Mustier as an independent member
The Competitive Landscape
Qonto's approach to obtaining a banking license reflects the diverse strategies employed by European fintech companies. While competitors like Memo Bank were founded as banks from the outset, and others like Finom operate with electronic money institution licenses, Qonto's path represents a measured evolution from payment services to full banking.
The European business banking sector has become increasingly crowded with neobanks targeting SMEs and freelancers. For a comprehensive overview of the competitive landscape, you can explore the complete list of business neobanks operating across different European markets, which highlights the various approaches and specializations within this rapidly evolving sector.
The company's substantial funding—over €600 million raised from venture capitalists and angel investors—provides the financial foundation necessary for this transition. Having achieved profitability in 2023, Qonto is in a stronger position than many fintech startups to navigate the regulatory requirements and capital demands of becoming a licensed bank.
Looking Ahead
The banking license application process may take years to complete, but it represents more than just regulatory compliance for Qonto. It's part of a broader "growing up" effort that could lay the groundwork for a future IPO, though that remains a longer-term prospect.
With a team of 1,600 people, Qonto is simultaneously working on product innovations like its AI-enabled "Qonto Intelligence" layer while building the banking infrastructure necessary for its license application. This dual focus on innovation and regulatory compliance will be crucial for maintaining competitive advantage during the transition period.
The Broader Implications
Qonto's banking license pursuit reflects broader trends in the European fintech sector. Digital payments continue to gain ground across Europe, with the European Central Bank noting that while cards remain the dominant payment instrument with a 45% share, mobile apps are growing rapidly from 4% to 7% of payment values.
For the SMB market specifically, the demand for integrated financial solutions continues to grow. Qonto's positioning as more than just a bank—offering tools for invoicing, bookkeeping, and financial management—aligns with this trend toward comprehensive business financial platforms.
Conclusion
Qonto's application for a banking license represents a natural evolution for a company that has successfully built a strong foundation in the European SMB banking market. With solid customer growth, proven profitability, and a clear strategic vision, the company appears well-positioned to navigate the regulatory process and emerge as a more formidable competitor in the European business banking landscape.
As the fintech sector continues to mature, Qonto's journey from payment provider to potential bank illustrates the ongoing transformation of financial services in Europe. Success in obtaining its banking license could establish Qonto as a significant force in European business banking and provide a template for other fintech companies pursuing similar regulatory transformations.