Revolut has raised $500m in a long-awaited funding round that makes the UK company one of the most valuable fintech groups in Europe.

Silicon Valley venture capital group TCV led the investment, which valued Revolut at $5.5bn — three times the valuation at its last fundraising round in 2018, and equalling the record for a private European fintech set by Sweden’s Klarna last year.

Nikolay Storonsky, Revolut chief executive, said the investment “demonstrates investor confidence in our business model”, as it attempts to shift from being a prepaid card used mainly for overseas travel, to an international bank that customers use on a daily basis.

Mr Storonsky said that “going forward, our focus is on rolling out banking operations in Europe, increasing the number of people who use Revolut as their daily account, and striving towards profitability”.

Revolut received a banking licence in Lithuania in December 2018, but only started moving a small number of customers to its banking entity at the start of this year.

The vast majority of the company’s 10m users are served through an e-money licence, which means customer deposits are held by a third party bank and not protected by deposit insurance schemes.

The company plans to shift the rest of its Lithuanian customers to full bank accounts in the next few months, before expanding its banking operations across central and eastern Europe later in the year.

It also plans to offer new lending products such as overdrafts and personal loans to encourage customers to use Revolut as their main bank account.

Revolut is the latest in a string of British banking start-ups expected to complete major fundraisings in the next few months.

Earlier this month, Starling received a £60m injection from existing investors, and said it would raise further cash later this year. Monzo and Monese, meanwhile, are both in talks to raise up to £100m.

The UK has become a uniquely competitive market for so-called neobanks. Total customer numbers jumped from 7.7m to 19.6m in 2019, according to a report by Accenture published on Monday.

However, they have struggled to convince customers to use them as their main accounts, with average deposit sizes falling in the second half of the year from £350 to £260 per customer.

Revolut’s fundraising was welcomed by the UK government as a vote of confidence in the City’s fintech sector amid concerns about the potential impact of Brexit.

John Glen, City minister, said: “It is clear that the UK fintech sector continues to thrive, and Revolut’s announcement, which comes on the back of record-breaking fintech venture capital investment in 2019, is a clear indicator of our strength as a place for fintech business as we leave the EU.”

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