London-headquartered card reader company SumUp is exploring options to obtain a banking licence in both its home UK market and the EU, as it continues to scale in a bid to “disrupt” business banking.
SumUp could apply for licences spanning the European market as early as next year, with an EU application expected to come first.
The fintech aims to become a European challenger bank within 12-18 months, following an application for a banking licence in Brazil earlier this year, Luke Griffiths, the company’s chief commercial officer, told The Banker.
“We’re looking at it now,” he said, noting that the fintech is set to target an EU banking licence first before looking to the “very competitive” UK market, as it expands to compete “more aggressively” with incumbent lenders.
SumUp serves over 4mn merchants globally and provides services such as payment acceptance and business accounts to small and microbusinesses in 36 markets.
The fintech has e-money licences in the UK, Ireland and Lithuania, which it can passport to operate across the continent.
Other UK fintechs have also targeted the somewhat underserved small business segment, such as Allica Bank, whose rapid growth has led it to consider expanding abroad.
It comes as challenger and specialist banks in the UK accounted for two-thirds of all lending to small and medium-sized businesses last year, exceeding that of the five largest banks for the fourth consecutive year.
Traditional lenders have failed to sufficiently invest in SME business banking over the years, Griffiths said.
“We actually see a big opportunity for us to disrupt SME banking by providing more of those products and services [such as lending], and we see that as becoming a core product offering that sits at the heart of other merchants’ relationship with SumUp,” he added.
“Obviously, a lot of our merchants will be using some of the traditional banks today . . . over time [we will offer] more and more services that will compete more aggressively with banks.”
The firm continues to prepare for an initial public offering operationally and is “monitoring the market”, said Griffiths, declining to provide detail on where or when this might take place.
Griffiths is a former Klarna executive and previously oversaw the introduction of buy now, pay later products in the UK, taking the Swedish fintech from a handful of merchants to more than 12,000.
SumUp has so far opted not to partner with banks in its commercial expansion, seeking instead to build products that can “disrupt” the banking sector and provide better services to merchants.
Its turnover in 2023 exceeded £160mn, with a net profit of £310,000, according to its most recent filing.
SumUp Pay, its mobile app launched in 2022, currently has features comparable to challenger banks’ and will in time become a “consumer bank”, Griffiths said.
“What we don’t have today is managing deposits or lending on the consumer side . . . we see that as an opportunity for us to build into over the next months and years,” he added.
“There is a big opportunity for us to leverage [insights from SumUp’s payments processing] to make more informed lending decisions and to give faster access to lending.”
As well as the UK market — where SumUp has “just as big ambitions” as in the EU — Griffiths sees opportunity in southern and eastern Europe, noting Spain, Italy and Poland in particular.
“It’s about establishing ourselves, and then looking at how we can disrupt even further,” Griffiths said.