Professional Legal Expert Services for Acquiring Banking License in Europe
Entrepreneurs willing to enter the top level of finance in today’s FinTech scene must consider getting a banking license in Europe. This page will provide you with LegalBison’s vital insights and suggestions.
Our team of experienced professionals to assist you with any question and project pertaining to FinTech projects.
Certified ACAMS consultant with 5+ years experience in compliance and FinTech regulations.
Banking License in Europe - Key Facts
Banking Licenses in Europe (EMI, PSP, PI, bank) – How to Proceed
Even to outsiders looking in, Europe seems like the ultimate destination. With projected assets under management (AUM) of US$20.87 billion in 2024 and a forecasted revenue growth of 16.35% in 2025, the opportunities are immense. Moreover, the Digital Payments market is poised to reach 674.60 million users by 2028. Companies with solid fundamentals can harness that and secure a lucrative position in the dynamic FinTech sector. Capitalize on the average AUM per user of US$126.10 in 2024 and other growth points.
Startups in the finance industry have a difficult but potentially lucrative task in front of them. So, we hope this text will help you gain a comprehensive grasp of the regulatory framework inside the Old World. It is crucial for achieving success.
Consideration of several issues, including regulatory criteria and jurisdictional variances, is necessary while acquiring a European banking license, regardless of your level of experience in the business.
Licensing: Registration and Regulation
Clear and well-defined regulations control the registration and regulatory processes necessary to get a banking license in Europe. Fintech firms may find a supportive climate in most European states. It won’t matter if they are looking to operate as an Electronic Money Institution after securing an EMI license Europe or provide other banking-related services. Many of our clients have already found success by taking advantage of the continent’s well-developed regulatory framework.
Broadly speaking, financial system stability and integrity, as well as industry innovation and competition, are the goals of European banking laws. Startups may organically win over customers and investors by playing by these rules. With the correct advice and knowledge, entrepreneurs may easily set up legal and successful fintech businesses in Europe. This is despite the fact that the licensing procedure is complex and requires careful due diligence and attention to compliance regulations.
European Regulations
The European Union updates its banking legislation on a regular basis. The big goal is to make sure the financial system remains strong and stable. In order to better regulate, oversee, and manage risk in the banking industry, a group of 28 national central banks came up with Basel III, an international regulatory agreement. To lessen the chances of another financial crisis, the Basel III framework was devised subsequent to the 2007–2008 crisis. Its stated goal is to increase the capital and liquidity criteria that banks must meet.
The last stage of implementation under Basel III Endgame began in 2017 and is scheduled to end in 2024. Regulations are expected to take effect by mid-2025. Among the many facets of banking regulation covered are liquidity regulations, minimum capital requirements, and leverage ratios. This all shows that European nations care about encouraging responsible banking practices and financial stability. The same is expected from every novel business.
In addition, the European Banking Authority (EBA) is crucial in the EU. It aids with developing regulatory standards and making sure they are applied consistently throughout member states. An all-encompassing structure including legally enforceable technical standards, suggestions, views, and guidelines is offered via its single rulebook project. Contributing to a transparent and unified banking environment across the EU, this framework really does encompass a multitude of topics. They include own funds, recovery and resolution, internal governance, and supervisory reporting.
Country Specifics
Although all member states of the European Union adhere to a similar set of rules when it comes to banking, there also are differences. Each EU member state does have its own unique set of rules on how to get a bank license and beyond.
Licenses themselves also vary widely. As an example, businesses may engage in cross-border commercial activities by obtaining an Electronic Money Institution (EMI) license from the UK’s Financial Conduct Authority (FCA). Other permits might not allow such operations.
Certain licenses could confine them to a specific nation. This means that local consumers are the only ones that can be catered to. Fintech firms looking to set up shop in Europe would do well to familiarize themselves with the rules of each nation. This is because the operating capacities and compliance needs of different jurisdictions might and frequently do differ greatly. Entrepreneurs may seize opportunities, stay in compliance with regulations, and optimize operations with sufficient research.
Registration: Usual Requirements
The usual requirements for obtaining a banking license in Europe are:
- Records relating to the actual proprietors;
- Strategic and operational framework;
- Verified, stable, and solvent financial guarantees;
- Documentation of the origin of the initial capital;
- Certifications of no criminal record and other fitness papers;
- Economical substance;
- Local presence.
This, of course, is a very broad approximation. To help you confidently launch your enterprise, we are offering a free first call. We will give more specifics to help you realize the scope of the process. Take advantage of LegalBison’s no-cost consultation call to get your fintech enterprise off the ground and running smoothly. You can avoid the pitfalls of dealing with European banking licenses on your own.
Benefits of Choosing Europe for Your Banking EMI/PSP
Entrepreneurs may ask, “Why choose Europe?”. Especially after they consider the difficulty of acquiring a license. Understand this: Europe has a VERY attractive environment for fintech firms. It actively encourages innovation and development on all fronts. Entrepreneurs seeking to launch their banking operations might find a multitude of advantages in Europe. This includes strong regulatory frameworks and access to a broad customer market. The core benefits of getting your EMI or PSP license Europe will be discussed below. Repeating past successes, LegalBison can assist you in confidently taking advantage of these prospects.
Newcomer Support
Although European banking rules could be a real challenge for fledgling fintech firms, regulatory organizations often provide assistance. This aid is reserved only for genuine businesses who are actively trying to comply. For instance, it is not necessary for directors and shareholders to live in the nation in order to launch a banking enterprise. Most licenses do permit remote operations to a certain degree. If you want to maximize the flexibility of remote operations while still adhering to regulatory obligations, LegalBison can help you with that. With our help, you may leverage this and every other newcomer support program.
Smooth Authorization Process
The authorization procedure is well-documented and transparent. This is thanks to laws imposed at both the EU and national levels. Because of the transparency, entrepreneurs will have fewer questions and fewer roadblocks as they go through the licensing process. You can trust LegalBison to lead you confidently through the authorization procedure step-by-step. You can put your emphasis where it belongs—on creating and expanding your business—while we take care of the tedious paperwork associated with complying with all Europe bank license rules.
Pro-Innovation Approach
Various nations in the European Union encourage new ideas by providing “sandbox licenses”. These may support experimental business models. Cultivating a vibrant fintech environment and encouraging experimentation are the core goals. Be advised, however, that conventional licenses do not extend to cryptocurrency-related activities. Crypto services are subject to a constantly changing regulatory environment. Therefore, entrepreneurs should research specific permits or seek advice from professionals. Taking advantage of Europe’s innovation-friendly climate to propel your fintech businesses ahead is a great strategy. A potential fast lane to success as well.
Innovative & Flexible System of Regulatory Requirements
Initiatives like doing away with penalties for startups in their first year of business are examples of how Europe’s system of regulatory standards is both innovation-oriented and adaptable. Startups are able to confidently negotiate compliance, which promotes entrepreneurship and eliminates the fear of imminent fines. Because of this leeway, fintech startups may concentrate more on development and innovation in their early phases. This creates a perfect setting for trying new things and adjusting to changing circumstances. With Europe’s progressive approach to regulation, entrepreneurs can take advantage of plenty of possibilities. All while staying in compliance with legislation that shifts to support them.
Fintech-Friendly Ecosystem
The incredible success stories of Revolut, Monzo, BoursoBank, and N26 demonstrate that Europe provides a very fintech-friendly environment. The sector continues to show its attractiveness with Revolut reaching 35 million consumers and N26 claiming eight million subscribers. This upward trend shows that things are going swimmingly. This is great news for innovation and customer as well as investor confidence. Europe is now offering entrepreneurs the perfect environment to start and grow their businesses. This is evidenced by the fast rise of these financial titans. Their growth trajectory is not out of reach for new players, too.
EMI Licenses for Stablecoins with the new MiCA Regulation in Europe
The new regulation for European crypto licensed companies, Markets in Crypto Assets (MiCA), replaces the concept of stablecoins with two types of crypto assets:
- Asset Referenced Token — cryptocurrency whose value derives from two or more other assets.
- E-Money Token — cryptocurrency whose value mimics a governmental fiat currency, such as USDC/USDT with the US Dollar.
Crypto Assets Service Providers (CASP) who are dealing in any way with EMTs are liable to obtain an Electronic Money Institution license in Europe, under the new MiCA Regulation. This requirement has been enforced since June 2024 and all crypto companies in Europe, whether operating under the existing VASP regime or the novel CASP licensing regime, must comply immediately.
We encourage all our clients and readers who own or operate a European crypto company to get in touch with our consulting team for an audit of their operations, in order to avoid operating illegally and exposing themselves to stringent sanctions from the EU.
Their businesses bear fruit thanks to LegalBison
Best company for Crypto Licenses! Kudos to the team for making the incorporation of our company really smooth
Quick set-up and straightforward process. It was a smooth process, we are happy to have chosen LegalBison as our Partner for incorporations, globally.
The team of LegalBison was very helpful and fast in supporting my company’s structural set up. They are undoubtedly top-level experts when it comes to licensing and registrations in the crypto and web3 industry. Highly recommend!
I highly recommend Legal Bison to any entrepreneur or business seeking top-notch services for their company formation. Their commitment to excellence and customer satisfaction is truly commendable.
Very proactive, responsive, and able to provide solutions and advice. The firm is familiar with the new industry of blockchain and cryptocurrency
LegalBison helped us navigate a space that’s often uncertain and complex, which gave us the confidence to move forward with our project.
Different Types of Banking Licenses in Europe
Fintech businesses in Europe may choose from a wide range of licenses. They provide different levels of regulatory scrutiny and freedom. In order to navigate the regulatory environment and choose the best choice for starting a fintech firm, it is essential to understand the full scope. Specifically, the EMI bank licenses of Europe and payment service providers (PSP) licenses are different in purpose and subject to different rules/regulations. For entrepreneurs seeking to make a mark in the fintech business, this section will be very helpful. It delves into the details of the several banking licenses that are available in Europe. It also offers insights into the features, perks, and beyond.
Electronic Money Institution License
Financial companies may issue electronic money and provide payment services without the ability to lend, much like conventional banks, with an Electronic Money Institution (EMI) license. A product of the European Union’s E-Money Directive, EMIs have spread all over the world to meet the needs of FinTech challenger banks and others in a similar position. To give you an idea, in the United Kingdom, an “e-money institution” is either a small payment institution that is authorized by the Financial Conduct Authority (FCA) or an electronic money institution that is subject to regulation. The rules are clear and the prestige level is high.
On the other side, getting an Electronic Money Institution license in Lithuania is becoming more and more common. The permit is appealing due to the country’s flourishing fintech industry. Varied companies licensed in Lithuania serve millions of consumers across the EU with operational efficiency and market responsiveness. This solidifies Lithuania’s position as a center for sustainable e-money firms in the EU and beyond.
The FinTech sector in Lithuania is highly desirable for EMI licenses because of its impressive responsiveness to market needs. More specifically, over 25% of the EU’s adult population uses services provided by Lithuanian-licensed financial institutions, which amounts to over 25 million people. A Lithuanian EMI license is essential for establishing long-term e-money firms. The data above shows how valuable it is.
Payment Service Provider License
To facilitate electronic payments like credit and debit card transactions, third-party organizations may operate as middlemen between customers and shops by obtaining a Payment Service Provider (PSP) license. Some well-known PSPs include PayPal, Apple Pay, and Stripe.
Services such as digital wallets, currency conversion, risk management, connectivity with payment gateways, and fraud prevention are all provided by these PSPs. Rather than having to team up with individual banks, PSPs let businesses accept a large list of payment methods. Their technological links with acquiring banks and card networks become invaluable. In order to make sure that PSPs follow security requirements like PCI DSS rules, the European Payment Services Directive regulates them.
The worldwide market for payment service providers was predicted to reach $US88 billion by 2027, and there were more than 900 of them in 2022 already. The importance of PSPs in enabling electronic transactions and propelling the expansion of the digital payments sector is obvious. Businesses seeking an appropriate license stand to benefit greatly from all of this.
Payment Institution License
Companies that let customers and businesses pay each other online are authorized to do so by obtaining the above-mentioned PSP license. It is sometimes called a Payment Institution license (PI license) and is required to form a remittance business. Countries like the UK and France use this term. To reiterate, the license is needed to control businesses that provide payment services but aren’t banks. In addition to processing payments, managing transactions, and preventing fraud, PIs and PSPs may provide a variety of merchant services. They facilitate the use of numerous electronic payment instruments, including digital wallets, credit cards, and debit cards.
These organizations may legally do business in accordance with the rules and regulations established by each country’s governing body when they acquire a PI or PSP license. The safety of online purchases is guaranteed by these regulatory audits. They check for adherence to consumer protection laws and security requirements. Overall, PIs are essential to contemporary payment ecosystems. They encourage innovation and competition in the financial services sector and ensure the safety and smoothness of electronic transactions.
Bank License
Most companies will never be able to establish a real bank in Europe. This is due to the very strict standards for obtaining a banking license. The capital needs alone are exceptionally costly, often exceeding billions of Euros. Other regulatory restrictions and compliance demands make this already tall task seem impossible.
The enormous financial requirements are oftentimes the main hurdle to entry, however. They prevent all but the strongest financial organizations from applying for a banking license. Companies that want to become banks also have to follow particular naming requirements, for example. You can’t include the term “bank” in your company name unless you have the proper license.
Creating a real bank in Europe is a daunting and disproportionately expensive task. Only firms with unmatched capital and the ability to navigate intricate regulatory systems can do it. Therefore, prospective companies and entrepreneurs should look at other options in the sector.
Also, to avoid any confusion – many use the terms “bank license Europe” and “banking license Europe” interchangeably. All mentions of bank licenses in the text above didn’t specifically mean this kind of license.
Your European banking business starts here and now!
Request a free consultation with our dedicated team of specialists with expertise in European banking licenses and get started within the next 24 business hours.
About banking licenses in Europe
Meeting the rigorous standards set forth by regulatory bodies is a must. Submitting copious amounts of paperwork, meeting capital requirements, and proving conformity with regulatory norms are commonplace. The particular processes and stipulations for obtaining a banking license differ according to the desired license type and the applicable jurisdiction. To ensure a smooth licensing procedure, it is recommended to get advice from specialists who are well-versed in the regulatory environment. Our firm has 10+ years of professional experience and it works in favor of every client.
Those seeking to operate as Electronic Money Institutions (EMIs) in Europe must meet all criteria set forth by the appropriate authorities and conform to all applicable regulations. Typical steps include filling out an application, attaching supporting documents, and showing that you’ve followed all applicable regulations. The particular steps and prerequisites could change based on the licensing authority’s demands. To successfully manage the licensing procedure, it is important to obtain help from experts. Give us a free call to see how knowledgeable we are in relation to your chosen country.
Several variables affect how much it will cost to get a banking license in the UK. These include the kind of license being sought, how complicated the application procedure is, and any related legal and administrative charges. You need to think about possible expenditures including regulatory fees, legal consulting fees, capital needs, and other connected charges. It’s hard to provide a clear number without evaluating unique conditions. We advise getting in touch with the specialists at LegalBison for a more precise quote that takes your specific circumstances into account. Whether you need help navigating the regulatory environment or just want some specialized advice, our experienced specialists are here to help you every step of the way through the licensing process. Get in touch with us right away for a thorough evaluation of this or any other bank license in Europe cost.
Yes. Actually, Revolut holds more than one European banking license. Currently, it has been granted a banking license for the European Economic Area (EEA) by the Bank of Lithuania. Additionally, the fintech company has obtained a full banking license from the European Central Bank (ECB). With these licenses, Revolut Bank UAB, based in Lithuania, offers a range of banking services. They encompass accepting deposits, granting loans, and providing payment services such as card payments, direct debits, and money remittance. Revolut Payments UAB, another entity within the Revolut group also licensed in Lithuania, complements these services. Not so long ago, Revolut Bank UAB reported that it had received deposits totaling €395 million and provided loans amounting to almost €12 million. Moreover, Revolut Payments UAB has processed payment transactions exceeding €100 billion and earned an operating income of nearly €170 million. This made it a dominant player in Europe’s fintech sector.
The range of services allowed by an Electronic Money Institution (EMI) license differs significantly from that of a bank license. Organizations can administer digital wallets, issue electronic money, and provide payment services with an EMI license, but they can’t lend money or take deposits as a typical bank can. On the other side, financial organizations may expand their service offerings, accept deposits, and lend money to customers if they choose to get additional permits. There is some overlap in the regulatory supervision and compliance requirements for both licenses. Still, they serve different subsets of the financial services sector and provide different degrees of authority and capabilities. What is banking license is vastly different from an EMI permit.
Licenses for Electronic Money Institutions (EMIs) and Payment Service Providers (PSPs) vary mainly in the range of services they authorize. With a PSP license, businesses may function as middlemen for a variety of payment methods. This inevitably allows customers and retailers to easily conduct electronic payments. However, with an EMI license, businesses may provide more than just transaction processing. Extra services are issuing electronic money, fully processing payments, and managing digital wallets. Though both licenses need regulatory monitoring and compliance, their respective capabilities differ significantly.
Several case-specific regulatory criteria, legal expenses, and the intricacy of the application are a few of the variables that might affect the final price tag for a Lithuanian Electronic Money Institution (EMI) license. Our staff at LegalBison is prepared to provide tailored advice and support all the way through the licensing procedure. So, we can give you an accurate estimate once we know more about your unique situation. We can assist you in understanding the possible expenses and successfully navigating the regulatory environment. Reach out to us now to talk about your EMI licensing timeline and get personalized recommendations based on your specific circumstances.
Start your banking services in Europe today
Request more information about Europe banking licenses: EMI, PI, PSP, etc.
Build your banking institution in full legality, LegalBison helps you comply with European regulations and focus on the actual business.
Leave a request and receive a call back from a legal expert within 24 business hours.
Our team of experienced professionals to assist you with any question and project pertaining to FinTech projects.
Certified ACAMS consultant with 5+ years experience in compliance and FinTech regulations.
