In the same month that Revolut filed for a US banking licence, fellow London-based digital bank Monzo closed its operations in the country after seven years.
Monzo’s not the first European neobank to falter in the US; German digital bank N26 also pulled out back in 2021.
Rather than securing its own banking licence, Monzo sought to sidestep regulatory headaches and entered the US market via a partnership with US lender Lead Bank in 2019. That allowed Monzo to launch faster, but left it operating as a thin layer on top of another company’s infrastructure.
Despite the experience of Monzo and others, a handful of European neobanks is charging ahead with their American expansion plans. Revolut’s hired a US CEO, while another of the UK’s neobanks, Starling, told Sifted last June it was looking into obtaining a US banking licence or acquiring another bank over there — a strategy deployed by British SME lender OakNorth, which bought the Michigan-based Community Unity Bank last March.
So why is the US such a tough market for European fintechs to crack — and do they stand a better chance than those that came before?
50 markets in one
In the US, neobanks have to contend with a fragmented regulatory system controlled by federal agencies alongside state regulations and licensing, as well as differing rules for different types of banks and special requirements for foreign banks.
The competitive landscape is also less straightforward than it used to be.
US banks have developed strong digital capabilities for themselves and have the capital to fund rewards programmes that startups often struggle to compete with.
Existing US neobank players such as SoFi and Chime also have plenty of funding to compete with incumbents on paid channels, sign-up incentives and rewards.
That means, to compete with the offers US customers are already fielding, European neobanks have to spend a lot more than they are used to.
“That means a European-style pitch built around a fee-free account plus better budgeting and notifications does not automatically change behaviour at scale, especially when many Americans already expect free checking as the baseline,” says Michael Foote, founder of comparison and cashback site Quote Goat.
Another obstacle is the difference in the way banks make money in Europe and the US. In America, banks earn the bulk of their profits from lending. Most European neobanks, however, have built their businesses around current accounts and payment fees.
Revolut, for example, gets the bulk of its revenue from card payments and interest income, with those making up 22.2% and 21.6% of the fintech’s £4.5bn in revenue in 2025, respectively.
That means they are arriving in a market where the real money is made in a part of banking they have less experience in. In order to compete, a European neobank needs to do three things at once: build an offering compliant with local laws, offer US-specific products and spend heavily on customer acquisition.
“A neobank that does not quickly build credible, local underwriting and a lending book can struggle to move from being a secondary account to being the main relationship,” says Foote. “Without that primary status, deposit balances, interchange volume and cross-sell all underperform, which makes the payback period on acquisition spend unattractive.”
When you factor in compliance and customer acquisition costs, it’s a lot harder for the unit economics on a US expansion to add up.
Revolut’s exception?
Revolut could prove the exception to the rule.
Rather than entering the US quickly via a partner bank, Revolut has prioritised securing its own US banking licence, which would give it full control over deposits, lending and product design.
Sumant Kumar, banking and financial markets technology chief at consultancy NTT Data, says that Revolut’s “borderless superapp” appeals to a demographic US banks have never really served — “younger, aspirational, internationally mobile” customers, which could give the bank an edge over existing players.
Holding a US banking licence will also enable Revolut to offer its US customer insured deposits, so it wouldn’t need to rely on a regulated partner bank to offer a full suite of services.
Monzo, meanwhile, never secured a US banking licence, instead depending on its partnership with Lead Bank, meaning it could not hold deposits on its own or offer full lending products, which limited its product offering and likely caused a squeeze on its margins, as it would have needed to share revenue with its partner bank.
Rav Hayer, head of banking and financial services at technology consultancy Thoughtworks, says: “Revolut’s approach signals a more patient and pragmatic second wave of European expansion. Rather than testing the waters, it is clearly aiming to build long‑term scale by pursuing a full US banking licence and reducing reliance on partner banks.”
Revolut’s bet on securing a full banking license from the beginning could help the fintech crack the US in a way previous attempts failed to, especially considering the regulatory environment is much friendlier in Trump’s second term.
If other neobanks commit to the patient route too, the US will become a less challenging beast for European neobanks to conquer.
