Allica Bank is laying the groundwork to expand into the European market after establishing itself as one of the fastest-growing fintech unicorns in the UK.

The small business lender has applied for a banking licence in Sweden, a move that marks its first expansion into a market beyond its homeland. The application has been submitted to the Swedish Financial Supervisory Authority, known as Finansinspektionen.

The choice of Sweden reflects a broader pattern among UK fintechs eyeing continental Europe: securing a banking licence within a single EU or EEA member state typically allows a firm to passport its services across the wider European market, making one licence application a gateway to many countries. Sweden, in particular, has attracted digital lenders in recent years, with its high rates of digital banking adoption among European consumers.

The licence bid follows a $155m funding round earlier this year that catapulted the firm to unicorn status, valuing the bank at "close to $1.2bn".

Over the past year, Allica's loanbook has grown substantially, with around £1.3bn in fresh originations giving its entire portfolio a 23 per cent uplift to just over £3bn.

Richard Davies, Allica's chief executive, previously told City AM that the SME market was a "barren wasteland" five to 10 years ago, and that Allica's "strategic focus" on the area was key to its growth. The Times Hundred has named the firm the UK's fastest-growing private company, while Sifted dubbed it Europe's fastest-growing start-up. That focus on established, profitable small businesses rather than consumer lending has distinguished Allica from many UK neobanks, which have historically struggled to reach sustained profitability.

The bank's financial performance has kept pace with its expansion. In the last year, Allica recorded a 23 per cent rise in pre-tax profit to £36.9m, up from £29.9m in 2024.

UK fintechs set sights on Europe

Allica's move towards Europe comes as a number of the UK's top fintech firms have shelved their US growth plans and turned to markets closer to home. The shift comes after years in which the US was widely seen as the default second market for scaling UK fintechs, with firms recalibrating as regulatory hurdles and competitive pressures in America proved steeper than expected.

Consumer payments platform Zilch acquired Fjord Bank in January in a deal that handed it a European banking licence. The firm's founder, Philip Belamant, told City AM the acquisition would allow the group to "move really fast" through its European rollout.

Meanwhile, neobank Monzo has dropped its US operations under its new boss, Diana Layfield, who has sought to focus the fintech's operations on the European market. Monzo has set up offices in Barcelona and Madrid with more than 50 employees, using Spain as a launch pad for its European operations.

Davies said Allica would not be "taking this step" into Europe "without the proven model" it has built in the UK. The timing of Allica's Swedish application will now rest with Finansinspektionen's approval process, and the pace of that decision will shape how quickly the lender can begin serving SMEs on the continent.

City minister Lucy Rigby said: "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."