Digital bank Kroo receives banking licence with restrictions from UK financial regulators
Digital bank Kroo has received its banking licence and is now authorised with restrictions by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), marking the company’s entrance into the final stage of the UK financial regulators’ rigorous licensing application process.
The bar to obtaining a UK banking licence is high, with a massive gap between the number of firms interested in becoming a bank and those that subsequently gain authorisation. Kroo is one of only two new banks to be authorised in 2021 so far. The regulators’ demanding application process involves submitting a regulatory business plan alongside a number of policies and key documents, capital and liquidity assessments approval, and attending in-depth feedback “challenge sessions”.
The authorisation with restriction means that Kroo can accept deposits up to £50,000 in total. This ‘mobilisation’ phase allows new banks a time to finalise their systems, infrastructure and controls ahead of public launch, which for Kroo is expected in early 2022, once the full banking licence is granted.
Kroo aims to remove the friction from financial interactions with family and friends, by reducing the social anxiety and stigma surrounding money management. The digital bank’s current product range – a prepaid debit card and its innovative app – enable customers to easily create groups with friends, track spending, and split and pay bills quickly and securely. The Kroo prepaid card is an e-money product, with funds protected by safeguarding rules, but not by the Financial Services Compensation Scheme. Once the restrictions are lifted in early 2022, Kroo will gradually close down the prepaid card scheme and offer its customers the ability to transition their existing accounts over to the new Kroo current account, free of charge.
As part of its product expansion, the bank will offer loans later in 2022 to provide access to fair and competitively priced credit. The digital bank will also grow its workforce significantly, across technology, marketing, risk, compliance and customer support.
To support the delivery of this phase, Kroo has assembled a new board of directors, including financial services veteran Cameron Marr as chair, corporate governance and financial control specialist Penelope Kenny as senior independent director, the seasoned tech entrepreneur Rudy Karsan as representative of the shareholders and risk and compliance expert Serena Joseph to lead its risk committee.
The newly formed board will join Kroo’s experienced leadership team, who have held senior roles in Santander, RBS, KPMG, Bank of Cyprus and Ratesetter.
Andrea De Gottardo, CEO of Kroo, says “It is incredibly exciting to finally be a bank that is authorised with restrictions. Very few firms in the UK get to this point and this represents a huge milestone for the entire team. We’ve worked hard over the years to build a bank our customers will not only love but can rely on and trust. Entering mobilisation brings us one giant step closer to becoming the greatest social bank on the planet.”
To date, Kroo has grown organically to 5,000 prepaid cardholders, with over 20,000 monthly transactions on the platform. The firm also launched a customer tree-planting referral scheme in June 2021, has a board-level social conscience committee and has pledged to donate a percentage of its profits to social causes. Kroo has now raised over £30m in venture capital funding since launch, having recently secured a £17.7m Series A investment.
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