Zilch says its deliberate acquisition of Fjord Financial institution is “not about banking”, telling Cost Professional the deal is a strategic path to passport licences.
Zilch has signed an settlement to accumulate Lithuania-based Fjord Financial institution to speed up its European growth.
The London-based fintech will buy 100% of Fjord Financial institution, a worthwhile challenger financial institution with round $120m in whole belongings which is totally authorised and controlled by the Financial institution of Lithuania and the European Central Financial institution.
The acquisition, introduced on January 8, provides Zilch a European banking licence, enabling the corporate to passport its credit score and funds companies throughout a number of nations effectively whereas increasing its product choices.
“This can be a defining second for Zilch as we construct a platform that may energy our worldwide growth,” mentioned Philip Belamant, Co-founder and CEO of Zilch. “Not solely does the deal give us a robust, trusted and totally regulated banking presence in Europe, however it represents a coming collectively of shared visions.”
Final 12 months was a monumental 12 months for Zilch, throughout which it raised over $175m in debt and fairness funding, surpassed $200m in annual income, secured a second Monetary Conduct Authority (FCA) funds licence, launched its Zilch Clever Commerce AI product and handed 5.5m registered clients.
Nonetheless, with this deal, 2026 is seeking to be much more important for Zilch than final 12 months, because it provides a completely regulated, worthwhile challenger financial institution to its portfolio, establishing a European hub in Vilnius.
Launched in 2021, Fjord Financial institution is a comparatively younger and small establishment, with round $120m in whole belongings, which has shortly constructed a repute for digital-first, shopper lending and financial savings merchandise.
Regardless of its smaller dimension in contrast with legacy European banks, Fjord has been by itself development trajectory mission and feels the deal will assist it realise its potential.
“Having established the enterprise and efficiently scaled it, the time is now proper to develop into a part of a much bigger mission,” mentioned Fjord CEO Veiko Kandla.
“Becoming a member of Zilch gives the right alternative to speed up development, develop our product set and attain hundreds of thousands extra clients with out compromising our consumer-first values.”
The transaction is predicted to finish within the second half of 2026, topic to regulatory approval.
Why Zilch says the deal is “not about banking”
Whereas the acquisition provides Zilch a European banking licence, the corporate has made it clear that the transfer will not be about changing into a standard financial institution. Chatting with Cost Professional, a Zilch spokesperson explains the deal is a strategic method to speed up the rollout of its funds and shopper finance choices throughout Europe.
“Now we have all the time owned our credit score lending licence. It’s core to what we do and permits us to tailor each a part of our buyer expertise,” the spokesperson says.
“For Europe, we needed to copy this mannequin. Nonetheless, regulatory credit score licences aren’t passportable, that means particular person functions should be made in every nation. Working as a financial institution lets you passport all companies quickly.”
Regardless of the primary purpose being to acquire licences swiftly, the spokesperson pressured the corporate didn’t rush to find the appropriate associate who aligned with its product philosophy and regulatory requirements.
“Leaving us the problem of discovering a financial institution with an analogous buyer centric imaginative and prescient, a financial institution with out legacy points, that was digital and with proficient individuals, and we now have discovered that in Fjord. These key components are what made the transaction so engaging to us,” says the spokesperson.
A sample is forming
Zilch’s acquisition of Fjord Financial institution illustrates a pattern within the fintech sector, the place startups wish to purchase regulated establishments to speed up growth and bypass prolonged licensing processes.
Chatting with Cost Professional to clarify the technique, Seb Johnson, Founder at Scaling Europe, says buying a financial institution is more and more seen because the quickest approach for fintechs to safe native banking permissions throughout a number of jurisdictions. He famous it is because conventional licensing processes can take years and differ considerably between regulators, making acquisitions a extra predictable route into new markets for corporations.
Reflecting on how this technique is already enjoying out throughout the sector, Johnson factors to a number of latest examples.
He notes Revolut has been in talks to accumulate a Turkish financial institution because it seeks extra native permissions along with its Lithuanian banking licence. In the meantime, within the US, each Revolut and Starling Financial institution have explored buying smaller, regionally regulated banks to achieve direct entry to the market, the place securing a licence via conventional channels has confirmed troublesome.
Comparable approaches have additionally emerged in Latin America, together with Nubank’s acquisition of a Mexican financial institution to speed up the rollout of financial savings and lending merchandise.
When requested whether or not there are dangers related to this acquisition-led strategy, Johnson mentioned it stays too early to know.
“I believe it’s too early to have the ability to know what dangers might come up as it is a comparatively novel strategy for startups. It definitely appears to be the quickest approach,” he says.
Zilch, nonetheless, is obvious the transaction is a strategic enabler moderately than a shift in the direction of conventional banking.
“This deal will not be about banking, however a method to passport into new markets to speed up our providing throughout Europe,” the Zilch spokesperson says. “We stay targeted on scaling a brand new technology of shopper finance throughout Europe, simply as we now have accomplished within the UK.”
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