Qonto, the French B2B neobank, reaches 600,000 customers and applies for a banking license.

One of the most frequently asked questions by Google users about the French fintech startup Qonto is whether it is a real bank. The answer is that, currently, it is not, although this could change, as Qonto has applied for a banking license in France, according to its CEO, Alexandre Prot. The company, focused on freelancers and small and medium-sized enterprises (SMEs) in Europe, operates with a payment institution license it obtained in 2018, which allowed it to introduce a "buy now, pay later" (BNPL) version. However, obtaining a credit institution license would enable it to offer a wider range of loan, savings, and investment options to its customers.

Leveraging its current license, which is valid throughout the EU, Qonto has managed to expand into several European markets, recently reaching 600,000 customers. However, the lack of a credit license poses an obstacle to its goal of reaching 2 million customers by 2030. While offering more comprehensive solutions seems a logical step to compete with traditional banks, obtaining the license and implementing credit are complex processes. This situation has led Qonto's competitors in the SME fintech sector to adopt diverse approaches, indicating that the company is not exactly in recovery mode.

For example, Memo Bank was founded as a bank from the outset and offers loans to SMEs, making it an exception. Finom, which operates with an electronic money institution (EMI) license, has only just begun to test the type of loans allowed by this regulatory category. Revolut, for its part, holds a full license in Lithuania, but beyond BNPL, it has not yet launched credit options for businesses, although it plans to do so this year. The pressure from well-funded competitors operating in both B2C and B2B sectors suggests that Qonto needs to accelerate its plans, especially now that Revolut has openly announced its intention to obtain a French license and establish Paris as its headquarters for Western Europe.

Without naming its competitors, Prot clarified that the decision to apply for the license was based on having reached profitability earlier than expected in 2023. As the son of former BNP Paribas president Baudouin Prot, Qonto's CEO had previously considered obtaining a credit license, although it was dismissed at the time due to its complexity and the time it would require. Now that they are profitable, they face a less difficult path to obtain additional funding if necessary, having raised $552 million in 2022 with a valuation of $5 billion.

Since its inception, Qonto has made two acquisitions: in 2022, it acquired its German competitor Penta, and in 2024, it took over the financial and accounting automation platform Regate. This strategy reflects its focus beyond the banking sector, positioning itself as an integrated financial management solution that also offers invoicing and accounting tools, allowing it to expand its presence in the B2B segment in Europe.

Although Prot did not provide a detailed breakdown of its 600,000 customers, he indicated that Germany has become its largest market after France, followed by Spain and Italy, as well as other markets entered in late 2024: Austria, Belgium, the Netherlands, and Portugal. However, Prot believes that some customers will only choose Qonto if it becomes a credit institution, as it would provide them with additional guarantees on their deposits and the credit option that many need.

Demonstrating the demand for credit, Qonto launched its Pay Later service in 2024, which has facilitated €50 million in financing. However, this offering is restricted by its current license, which limits Qonto to lending only from its own capital and to customers for loans of no more than 12 months. To help its customers access other types of loans, Qonto also established a "funding hub" with fintech partners like Defacto and Riverbank, a collaboration they hope to maintain for several years.

The conversion into a credit institution would open new sources of revenue, both from the margins on loans and from deposits that could be used for lending. Although Prot did not disclose specific revenue figures, he mentioned a 30% increase over the last year. However, he emphasized that revenue growth is not their main motivation. Beyond acquiring new customers, Qonto sees this as an opportunity to rely less on third parties and to launch products more quickly, such as its recent development of an in-house card processor.

With a team of 1,600 people, Qonto aspires to have the capacity to work on new product developments, such as the "Qonto Intelligence" layer powered by artificial intelligence, while enhancing its banking infrastructure and risk management teams. These actions also aim to demonstrate their readiness to the banking supervisor in France, with whom they plan to collaborate to obtain the license. Although the licensing process could take years, it is part of an overall effort of "maturation" for Qonto, which has recently brought in several senior profiles to its board of directors. These steps could pave the way for a future IPO, although that is something envisioned for the long term.