Revolut plans a return to Canada in 2022, fraught with pitfalls



  • The Revolut co-founder and CEO said he would return to the Canadian market once he has “more resources” at his disposal.
  • This will prepare it for fierce competition with other challenger banks in the market.
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UK based

plans to return to Canada next year and will offer its full line of products, through BetaKit. The move, which Revolut co-founder and CEO Nikolay Storonsky revealed at the Collision 2021 conference, comes about a month after the company. opted withdraw from the Canadian market.

The app was in beta and lacked the full product offering for the UK market. Revolut decided to end its local presence because the company had limited resources, according to Storonsky, who also said Revolut would have “more resources” upon his return. In the meantime, the company is keeping Beta user accounts are open until May 15 and will refund unspent funds.

Digital banking users and penetration

Revolut plans a risky return to Canada next year.

Insider intelligence

Revolut will face a difficult task returning to Canada for three reasons.

  • Entrenched incumbents and strict regulations are obstacles for challengers. The Canadian banking sector is highly concentrated and is dominated by just five big players: BMO, RBC, TD Bank, Scotiabank and CIBC. The use of digital banking services in Canada is expected to be widespread – the proportion of adults who use a digital channel at least once a month is projected to reach 72.0% in 2021, but the online-only space is dominated by historical actors Simplii and Tangerine. Canada’s banking regulatory system also serves as a barrier to entry.
  • The challengers already present in Canada are growing. Koho, a important Toronto-based autonomous insurgent, saw its user base almost double since 2019, crossing of 350,000; the neobank also recently announced that it had raised C $ 70 million ($ 52.2 million) in private equity. Meanwhile, Canada the biggest robo-advisor, Wealthsimple, entered the banking space with the deployment of its peer-to-peer payment platform, Wealthsimple Cash. The first signs of the challengers’ momentum indicate intense competition within the neobank space. Crowding can also prevent Revolut from standing out when it returns.
  • Revolut is ahead of itself, and a recovery in Canada will be a costly fight. Revolut’s first entry into Canada was not complete, as it did not offer as broad a feature set as its UK banking, investing and payments offerings. With more capital, Revolut could fight more against the other challengers and the incumbents upon his return; the company is in talks to raise funds, through Sky News.

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