Fresh figures from a Freedom of Information request by Pathlight Associates reveal that successful applications for e-money institution (EMI) licences have plunged dramatically. In 2025, only 35 applicants secured an EMI licence, an 80% decline from the 171 approved by the Financial Conduct Authority (FCA) in 2020.
What is an EMI Licence?
An EMI licence permits non-bank companies to issue digital cash, manage electronic wallets, and provide payment services under regulatory supervision. It is often viewed as a stepping stone toward obtaining a full UK banking licence, as firms establish their presence in the market. For instance, Revolut secured its EMI licence in 2016 before receiving its full UK banking licence earlier this year after some regulatory friction.
Market Slowdown and Regulatory Challenges
The total number of licence applications also dropped sharply, from 371 in 2020 to just 155 in 2025. Muj Malik, associate partner at Pathlight, commented: “While e-money and payment firms were expected by some to create a steady flow of ‘banks in waiting’, this has not happened at scale, with the Revolut pathway proving the exception rather than the rule.”
This downturn coincides with zero applications for full UK banking licences in 2025, despite Treasury efforts to promote a pro-growth regulatory approach. Chancellor Rachel Reeves has urged watchdogs to ease burdens on startups through reforms aimed at bolstering fintech growth. A new ‘Scale Up’ unit, a joint venture between the FCA and the Prudential Regulation Authority (PRA), has been touted as a way to supercharge innovative firms.
However, Malik argues that a “dual squeeze” is affecting the sector: “commercial pressure from a more saturated market, and regulatory pressure from more demanding oversight” have made the EMI licence no longer widely perceived as an easier entry point into UK financial services.
Notable Recent Approvals
Despite the overall decline, some companies have successfully obtained EMI licences in the past year, including buy now, pay later firm Klarna, financial assistant app Plum, and foreign exchange firm Tenora. Tenora’s CEO, Harry Adams, praised the FCA, stating: “The FCA understood the market throughout the application process. The same can’t be said for a lot of other regulators across Europe who don’t appreciate why a business like ours requires an EMI licence.”
