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British fintechs are stepping up their ambitions in the US, exploring acquisitions of established lenders as a quicker route to securing banking licences across all 50 states.
UK fintechs eye US bank acquisitions
Digital challengers such as Revolut and Starling are considering the purchase of nationally chartered banks, according to people familiar with their plans, in a bid to accelerate their US expansion.
Traditionally, fintechs seeking entry into the American market have applied directly to the Office of the Comptroller of the Currency (OCC) for a charter.
However, the process is notoriously lengthy and often inconclusive. Monzo, for example, abandoned its US licence application in 2021 after regulators signalled that approval was unlikely.
Acquisition, Acquisition, Acquisition
Acquisition, by contrast, provides a ready-made platform.
OakNorth, the UK business lender, set a precedent earlier this year by acquiring Michigan-based Community Unity Bank.
The move, executives said, gave OakNorth an immediate operating framework, staff and local credibility — benefits that a ground-up application would have struggled to deliver at the same speed.
Industry insiders argue that the environment for such deals is unusually favourable.
Under President Trump’s administration, senior regulators have signalled a shift towards faster, more permissive merger approvals.
Michelle Bowman, recently confirmed as vice-chair for supervision at the Federal Reserve, has indicated that oversight will be “more bank-friendly”, while both the Federal Deposit Insurance Corporation and the OCC have rolled back guidance that previously constrained takeovers.
“The window is open and it may not stay open — so it would be best to move now,” said David Portilla, partner at US law firm Davis Polk.
For UK fintechs battling slower customer growth at home, the appeal of a vast new market and deeper deposit pools is self-evident.
Challenges?
Yet challenges remain.
Acquiring a US bank often entails inheriting a network of physical branches — an expensive prospect for digital-first lenders that have shunned high street infrastructure in their domestic markets.
OakNorth, for instance, now finds itself operating a branch in Michigan, even as it emphasises digital channels for future growth.
Klarna, the Swedish buy-now-pay-later group preparing for a New York listing, is weighing its own options, though executives say any licence decision will follow its IPO.
For the UK’s fintech champions, the coming months may prove decisive.
If the deregulatory mood in Washington endures, acquisitions could mark the fastest route to establishing a permanent foothold in the world’s most competitive banking market.
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