“Is Qonto an actual financial institution?” is likely one of the prime urged questions in Google searches concerning the French fintech startup. The reply is not any, but it surely may change: Qonto has filed for a banking license in France, CEO Alexandre Prot revealed.
Qonto, which targets European freelancers and SMBs, presently 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 clients.
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 clients. However missing a credit score license is a hindrance for its aim to succeed in 2 million clients by 2030.
Whereas providing a extra complete answer looks as if 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 problem in several methods, and why Qonto isn’t precisely enjoying catch-up.
Memo Financial institution was founded as a bank from the outset, and provides 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 form 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 do so this year.
Nonetheless, the advertising and marketing 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 forward of schedule in 2023.”
The son of former BNP Paribas President Baudouin Prot, Qonto’s CEO had clearly already thought of 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-about the thought at one level, however finally dismissed it as a result of it could 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 boost extra funding than the $552 million it secured in 2022 at a $5 billion valuation. Prot recently said that “the primary, or the one purpose, why we may increase further capital is that if we do a big or very massive M&A deal, paid principally 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 method helped it develop within the B2B section throughout Europe. Prot declined to provide a full breakdown of its 600,000 clients, 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 underneath the belief that some clients received’t select Qonto until it’s a credit score establishment. That’s as a result of this may grant them further 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 in financing, in accordance with the corporate (roughly $59 million). However the supply is restricted by its present license — each for Qonto, which might 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 mentioned Qonto plans to maintain it for a minimum of just a few 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 could be capable to use for lending. Prot declined to reveal income figures however mentioned that income elevated by 30% within the final yr.
Nonetheless, Prot mentioned that this extra income wasn’t the primary issue at play. Buying new clients apart, Qonto additionally sees this as a chance to rely much less on others and launch new merchandise sooner. In the identical vein, it lately constructed an in-house card processor to extend acceptance charges whereas lowering its reliance on third events.
With a staff of 1,600 individuals, 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 danger administration groups.
The latter can also be aimed to reveal its readiness to France’s banking supervisor, with which it plans to work intently to acquire its license. The method should still take years, however it is usually a part of a broader “rising up” effort for Qonto, which lately added a number of senior profiles to its board of administrators. These steps may additionally assist lay the groundwork for a future IPO, although that continues to be a longer-term prospect.
Be aware: This story’s headline was modified to make clear that Qonto is just not but a financial institution.