Allica Bank has applied for a banking licence in Sweden, the first time the UK digital business bank has sought to operate outside its home market and the opening move in what it hopes will become a wider European expansion.

The fintech said on Monday that it has submitted an application for authorisation to Finansinspektionen, the Swedish Financial Supervisory Authority, and has already established a legal entity in the country as part of the process.

It has also hired an executive team to build the Swedish business, combining banking and technology experience. Rickard Westlund will lead the operation, alongside Javier Ubillos as chief technology officer, Victor Ramstrom as chief product and operating officer, and Samuel Tawadros as chief financial officer. Recruitment for a range of further product, technology and operational roles is under way.

The announcement follows Allica’s $155 million Series D funding round in February, which valued the bank at close to $1.2 billion. Allica said at the time that the investment would support its next stage of growth, including a first expansion outside the UK.

If the licence is granted, the bank says Sweden would also provide a platform from which to offer its services across other European Union markets over the longer term.

Why Sweden

Allica said it chose Sweden as its first prospective international market because of its significant established business lending market, the high concentration of market share among incumbent banks, its highly digital economy and a well respected regulator. The bank believes established businesses there face many of the same banking challenges as their counterparts in the UK.

Richard Davies, Allica Bank’s chief executive (pictured), said: “Sweden has one of Europe’s most digital economies, with a well-respected regulator, making it a natural choice for Allica’s first expansion outside the UK. Its established businesses face many of the same challenges we have seen in the UK, where firms that make a major contribution to the economy have too often been underserved by traditional banks.

“We would not be taking this step without the proven model we have built in the UK. Allica has grown by delivering on its promises to established businesses, with a full stack product offering and combining market-leading technology with the expertise and service these businesses need. We are excited by the opportunity to bring our model to Sweden, subject to regulatory approval.”

Built on a UK track record

Allica has grown rapidly since securing its UK banking licence in 2019 by focusing on established businesses with between five and 250 employees, a segment it says generates a third of the UK’s GDP but has historically been underserved by both the high street banks and digital challengers. It has now lent more than £4 billion to established UK businesses, and more than 15,000 of them use its current account.

That growth has come as challenger banks as a group have taken a growing share of UK SME lending from the traditional high street names, competing on speed, technology and service.

Allica has been building momentum at home this year. It was named the UK’s most recommended business bank in March, based on feedback from more than 4,000 UK businesses, shortly after its funding round secured its status as one of the country’s newest fintech unicorns. Last October it moved deeper into working capital finance with the acquisition of SME lending fintech Kriya, its third acquisition.

Lucy Rigby, the Economic Secretary to the Treasury, said: “It’s brilliant to see Allica building on their success here in the UK and expanding into other European markets.

“The UK is a fintech powerhouse, and I’m fully committed to ensuring it remains a jurisdiction where the world’s most innovative financial services firms choose to start, scale and stay.”

Allica’s application remains subject to review and approval by Finansinspektionen, and the bank said it will set out further details of its plans for Sweden if and when authorisation is granted.

Read the full article →