“Is Qonto a real bank?” is among the prime steered questions in Google searches concerning the French fintech startup. The reply is not any, however it might change: Qonto has filed for a banking license in France, CEO Alexandre Prot revealed.
Qonto, which targets European freelancers and SMBs, at the moment operates with a fee establishment license it obtained in 2018, and which already enabled it to introduce a form of buy now, pay later (BNPL). However a credit score establishment license would let it supply broader lending, financial savings, and funding choices to its goal prospects.
Since its present license is legitimate throughout the EU, Qonto has already been in a position to develop into a number of European markets, and lately reached the milestone of 600,000 prospects. However missing a credit score license is a hindrance for its objective to succeed in 2 million prospects by 2030.
Whereas providing a extra complete resolution looks as if a pure transfer to compete with incumbent banks, acquiring a license and rolling out credit score isn’t straightforward. That explains why Qonto’s SMB fintech rivals have approached this difficulty in several methods, and why Qonto isn’t precisely enjoying catch-up.
Memo Financial institution was founded as a bank from the outset, and gives lending to SMBs, however that makes it an outlier. Finom operates with an digital cash establishment (EMI) license, however it solely simply began testing the form of lending that this regulatory center floor permits. Revolut has a full Lithuanian license, however aside from BNPL, it has but to roll out credit score choices to companies — though it plans to do so this year.
Nonetheless, the advertising energy of well-funded rivals that function each in B2C and B2B might have been an indication that Qonto wanted to speed up, particularly as Revolut lately loudly introduced plans to hunt a French license and turn Paris into its Western Europe HQ.
Not mentioning rivals, Prot mentioned that Qonto’s timing was pushed by “having achieved profitability ahead of schedule in 2023.”
The son of former BNP Paribas President Baudouin Prot, Qonto’s CEO had clearly already considered pursuing a credit score license — and that’s not only a guess. Throughout a press briefing, Prot confirmed that he and co-founder Steve Anavi critically thought of the concept at one level, however finally dismissed it as a result of it will have required an excessive amount of time and extra fundraising.
Having been worthwhile since 2023 signifies that this hurdle now received’t require Qonto to lift extra funding than the $552 million it secured in 2022 at a $5 billion valuation. Prot recently said that “the main, or the only reason, why we could raise additional capital is if we do a large or very large M&A deal, paid mostly in cash.”
In its eight years of existence, Qonto has made two acquisitions: It took over its German competitor Penta in 2022, and it purchased accounting and monetary automation platform Regate in 2024.
The latter is a mirrored image of Qonto’s positioning past banking and as an built-in finance administration resolution, with an providing that additionally contains instruments for invoicing and bookkeeping.
This strategy helped it develop within the B2B section throughout Europe. Prot declined to present a full breakdown of its 600,000 prospects, however he mentioned that Germany is now Qonto’s largest market after France. In unspecified order, Spain and Italy come subsequent, adopted by the markets it entered in late 2024: Austria, Belgium, the Netherlands, and Portugal.
Nonetheless, Prot operates below the belief that some prospects received’t select Qonto until it’s a credit score establishment. That’s as a result of this is able to grant them further ensures on their deposits, and since they need credit score to be an choice in the event that they ever want it, which some already do.
Qonto validated that demand for credit score with its Pay Later service; launched in 2024, it has already facilitated €50 million in financing, in keeping with the corporate (roughly $59 million). However the supply is proscribed by its present license — each for Qonto, which may solely lend from its personal fairness, and for its prospects, who can’t borrow for longer than 12 months.
To assist its prospects entry different forms of loans, Qonto additionally put collectively a “financing hub” with third-party fintech companions together with Defacto, Karmen, Riverbank, and Silvr. Prot mentioned Qonto plans to maintain it for at the very least a couple of extra years. And a few of these choices are extra particular than what the corporate might wish to get into.
Nonetheless, changing into a credit score establishment in its personal proper would unlock new income for Qonto, each from the margin on credit and extra upside from deposits, which it will be capable of use for lending. Prot declined to reveal income figures however mentioned that income elevated by 30% within the final 12 months.
Nonetheless, Prot mentioned that this extra income wasn’t the primary issue at play. Buying new prospects apart, Qonto additionally sees this as a possibility to rely much less on others and launch new merchandise quicker. In the identical vein, it lately constructed an in-house card processor to extend acceptance charges whereas decreasing its reliance on third events.
With a staff of 1,600 folks, Qonto now hopes that it’s going to have the bandwidth to work on new product developments, such because the AI-enabled “Qonto Intelligence” layer, whereas additionally enhancing its banking infrastructure and threat administration groups.
The latter can be aimed to show its readiness to France’s banking supervisor, with which it plans to work intently to acquire its license. The method should take years, however it is usually a part of a broader “growing up” effort for Qonto, which lately added a number of senior profiles to its board of administrators. These steps might additionally assist lay the groundwork for a future IPO, although that continues to be a longer-term prospect.
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