“Is Qonto an actual financial institution?” is likely one of the prime instructed questions in Google searches in regards to the French fintech startup. The reply isn’t any, but it surely might change: Qonto has filed for a banking license in France, CEO Alexandre Prot revealed.
Qonto, which targets European freelancers and SMBs, at present operates with a cost establishment license it obtained in 2018 and that already enabled it to introduce a type of purchase now, pay later (BNPL). However a credit score establishment license would let it provide broader lending, financial savings, and funding choices to its goal clients.
Since its present license is legitimate throughout the EU, Qonto has already been in a position to broaden into a number of European markets, and just lately reached the milestone of 600,000 clients. However missing a credit score license is a hindrance for its aim to achieve 2 million clients by 2030.
Whereas providing a extra complete answer looks like a pure transfer to compete with incumbent banks, acquiring a license and rolling out credit score is just not straightforward. That explains why Qonto’s SMB fintech rivals have approached this challenge in several methods and why Qonto isn’t precisely enjoying catch-up.
Memo Financial institution was based as a financial institution from the outset and affords lending to SMBs, however that makes it an outlier. Finom operates with an digital cash establishment (EMI) license, but it surely solely simply began testing the type of lending that this regulatory center floor permits. Revolut has a full Lithuanian license, however apart from BNPL, it has but to roll out credit score choices to companies — though it plans to take action this yr.
Nonetheless, the advertising energy of well-funded rivals that function each in B2C and B2B could have been an indication that Qonto wanted to speed up, particularly as Revolut just lately loudly introduced plans to hunt a French license and switch Paris into its Western Europe HQ.
Not mentioning rivals, Prot stated that Qonto’s timing was pushed by “having achieved profitability forward 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 in the end dismissed it as a result of it might have required an excessive amount of time and extra fundraising.
Having been worthwhile since 2023 signifies that this hurdle now gained’t require Qonto to boost extra funding than the $552 million it secured in 2022 at a $5 billion valuation. Prot just lately stated that “the primary, or the one motive, why we might elevate extra capital is that if we do a big or very giant M&A deal, paid largely in money.”
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 answer, with an providing that additionally consists of instruments for invoicing and bookkeeping.
This strategy helped it develop within the B2B phase throughout Europe. Prot declined to present a full breakdown of its 600,000 clients, however he stated 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 underneath the idea that some clients gained’t select Qonto except it’s a credit score establishment. That’s as a result of this could grant them extra ensures on their deposits, and since they need credit score to be an possibility 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 (roughly $59 million) in financing, in line with the corporate. However the provide is proscribed by its present license — each for Qonto, which may solely lend from its personal fairness, and for its clients, who can’t borrow for longer than 12 months.
To assist its clients entry different varieties of loans, Qonto additionally put collectively a “financing hub” with third-party fintech companions, together with Defacto, Karmen, RiverBank, and Silvr. Prot stated Qonto plans to maintain it for at the least just a few extra years. And a few of these choices are extra particular than what the corporate could 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 might be capable to use for lending. Prot declined to reveal income figures however stated that income elevated by 30% within the final yr.
Nevertheless, Prot stated that this extra income wasn’t the primary issue at play. Buying new clients apart, Qonto additionally sees this as a possibility to rely much less on others and launch new merchandise sooner. In the identical vein, it just lately constructed an in-house card processor to extend acceptance charges whereas lowering its reliance on third events.
With a group of 1,600 individuals, Qonto now hopes that it’ll have the bandwidth to work on new product developments, such because the AI-enabled “Qonto Intelligence” layer, whereas additionally enhancing its banking infrastructure and danger administration groups.
The latter can also 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 “rising up” effort for Qonto, which just 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 is still a longer-term prospect.
Notice: This story’s headline was modified to make clear that Qonto is just not but a financial institution.
