Revolut acquired around 500,000 customers in under two years, which Tony Clark says ranks it among the UK's most successful fintechs at customer acquisition.
Nikolay Storonsky says Revolut chose an e-money licence in 2015 because it could be obtained within three months, and it has never seriously considered becoming a bank.
Revolut for Business launches in mid-May with multicurrency accounts opening in under three minutes, and Storonsky says 8,000 companies have already registered.
Revolut grows by adding services without ever becoming a bank
Revolut is building a broad financial services app without becoming a bank. Its free interbank FX rates, automated in-house infrastructure and fast e-money licence let it acquire customers cheaply and then add products they ask for. The business account launch applies the same approach to small companies that banks serve poorly.
Takeaways
Revolut chose an e-money licence, not a bank licence. Revolut took an e-money licence in 2015 because it arrived within three months, against two years for a banking licence. Client funds sit at a partner bank such as Barclays, which carries the credit risk. Storonsky says Revolut never seriously considered becoming a bank.
Free interbank FX rates drive acquisition and cross-selling. Revolut offers interbank rates for free, which brings in customers with zero marketing spend. It then cross-sells other products. Storonsky says bank FX is expensive because IT, sales and trading departments each take commissions.
Owning automated infrastructure makes cheap FX viable. Revolut built its systems in house and owns its infrastructure. An automated system connected to several banks and liquidity providers manages risk and hedges a few times a day, without needing an army of people.
Revolut rebundles services banks fail to provide. Revolut began with a card and currency exchange, then added cross-border transfers, borrowing, insurance and a current account opened in three minutes. Storonsky says features follow customer requests and compares this to Amazon growing beyond books.
Modular software keeps a broad product simple. The app is built from reusable blocks, and six designers work on packaging many products into a simple interface. Clark points to a 4.5 Google Play rating for Revolut, against 4.1 for Monzo and 2.3 for Atom Bank.
Revolut for Business targets underserved small companies. The product launches in mid May with multicurrency accounts opened in under three minutes, corporate cards and interbank rates. Revolut registers 50 to 70 companies a day, with more than 8,000 so far, including Virgin Atlantic and Emirates.
Industry knowledge helps founders but is not enough. Clark argues that founders with financial services backgrounds do better, while marketing-led founders gain early hype but struggle to go further. Storonsky agrees knowledge helps and adds that founders must think outside the box. He left Credit Suisse trading after eight years.
Banking licence versus e-money licence
Revolut holds Mastercard and Visa licences and an e-money licence, with no banking licence. It has connected directly to UK faster payments.
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Storonsky says an e-money licence lets it issue accounts in most countries. Cards need local licences, which take three to four months.
Clark reports that Monzo's Tom Blomfeld took a banking licence partly because it simplifies communication with journalists and customers.
Clark questions whether creating money and transforming maturities are needed for the services Revolut offers.