“Is Qonto an actual financial institution?” is without doubt one of the prime recommended questions in Google searches concerning the French fintech startup. The reply is not any, nevertheless it might 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 cost establishment license it obtained in 2018, and which already enabled it to introduce a type of purchase 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 increase 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 objective to succeed in 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 just isn’t straightforward. That explains why Qonto’s SMB fintech opponents have approached this problem 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, nevertheless it solely simply began testing the sort 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 take action this 12 months.
Nonetheless, the advertising energy of well-funded opponents 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 flip Paris into its Western Europe HQ.
Not mentioning opponents, 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 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 of the thought at one level, however in the end 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 just lately stated that “the principle, or the one motive, why we might elevate extra capital is that if we do a big or very giant 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 contains instruments for invoicing and bookkeeping.
This method 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 beneath the idea that some clients received’t select Qonto until it’s a credit score establishment. That’s as a result of this may 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 in financing, in line 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 stated Qonto plans to maintain it for at the very least just a few extra years. And a few of these choices are extra particular than what the corporate could need to get into.
Nonetheless, turning 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 have the ability to use for lending. Prot declined to reveal income figures however stated that income elevated by 30% within the final 12 months.
Nonetheless, Prot stated that this extra income wasn’t the principle issue at play. Buying new clients apart, Qonto additionally sees this as a chance to rely much less on others and launch new merchandise quicker. In the identical vein, it just lately constructed an in-house card processor to extend acceptance charges whereas decreasing its reliance on third events.
With a group 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 be aimed to exhibit 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 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 continues to be a longer-term prospect.
