Europe’s largest neobank wants to conquer the world

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Hear this story THE PANDEMIC could have been the terminal for Revolut, a company created in 2015 to help travelers avoid high exchange fees. Instead, its latest annual results, released on June 21, suggest the London-based digital bank is thriving. Despite reducing its marketing budget, it gained 4.5 million customers in 2020, bringing the total to 14.5 million. Its revenues increased 57% to 261 million pounds sterling ($ 362 million); it was profitable in the last two months of 2020. A fundraising of 580 million dollars, completed in July, made it one of the most valued private fintechs in Europe, with a value of 5.5 billions of dollars.

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This helps the business move away from colorful debit cards and multi-currency e-wallets to include services like stock and cryptocurrency trading, trade accounts and payments, and even credit. Today, debit card and other interchange fees only make up 36% of his income, slightly more than what he earns selling subscriptions to perks like cheap phone insurance.

Ultimately, Revolut, known for its iconoclastic style and self-confidence, would like to become “the first truly global financial superapplication”. As fintechs have offered services provided by banks, people’s finances have become fragmented across many applications, says Nik Storonsky, boss of Revolut (pictured). The company aims to be a great “consolidator”, offering all the financial products one could possibly need in a single account accessible worldwide. It has applied for banking licenses in Britain, America and Australia to offer loans (it already does in Europe) and is considering launches in Asia and Latin America. It is now present in 35 countries.

Giants with much more resources, such as Square in America or Grab in Asia, also want to become financial services platforms. But Revolut fans argue that he has rare strengths. One is its ability to offer international payments and currencies to everyone at a rate once reserved for large corporations, which helps attract city dwellers and small exporters. Another is the reputation for being quick to create new products.

Yet even if this is enough to boost its growth, Revolut’s ability to achieve sustainable profits remains to be proven. Its monthly performance since late 2020 owes in part to an increase in crypto trading (Revolut charges 1.5% per trade) and prices (which have driven up the value of its crypto holdings). During the year he actually lost £ 168million, up from £ 107million in 2019.

But perhaps the company’s lofty goal shouldn’t be taken at face value. A UK banker notes that the superapp’s story can be designed to attract potential business investors and buyers. Both showed an appetite for British fintech. On June 17, Wise, a cross-border payments startup, announced plans to go public in London and investment banking titan JPMorgan Chase agreed to buy Nutmeg, a digital asset manager. The big financial consolidation may well end up involving some familiar institutions. ■

To properly enter the dark, Revolut must lower its customer acquisition costs. Full-fledged super-apps, like MercadoLibre in Latin America or WeChat in China, have done this by selling financial products to members of their non-financial networks (the first is an e-commerce platform, the second a messaging app) . But Revolut lacks such a network. He could also try to increase his revenue per customer by selling them more products. That, however, would force him to develop more sophisticated products, says Ronit Ghose of Citigroup, a bank. Few of its richest clients, for example, would abandon their broker unless Revolut could provide access to more stocks than the 800 it offers today.

This article appeared in the Finance & economics section of the print edition under the title “Just paste it”

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