Startup Europe — The Sifted Podcast
00:10:50 · Amy Lewin, Tom Matsuda
[00:10:50] S0: And so once they have the banking license, it's highly probable that they launch mortgages in The UK. How do you think they'll go about doing that? And do we have any clues from how they've done it in Lithuania? [00:11:02] S1: Yes. So so as as we've mentioned, they're currently testing the mortgages product in Lithuania and hoping to kind of roll that out later on to, well, it's currently earmarked for Ireland and and France as well. In Lithuania, they're currently in the kind of testing process and people being signed up to the wait list. So it's still quite early stages. And, you know, in terms of whether that coming to The UK will will largely depend on how, I guess, these kind of more European test cases go. But in Lithuania, what they're focusing on is refinancing mortgages. So these are people who already have a history of making repayments on a mortgage. They may own some equity already in their house. And, yeah, that means that from a kind of bank perspective, right, they're they're less risky because they have this history of repayments. I I imagine as they kind of roll out initially across these different jurisdictions, they'll focus on refinancing because those are the less risky customers compared to first time buyers who obviously have no history of buying a house. It goes with us. [00:12:01] S0: Makes a lot of sense because Revolut also needs to manage its risk. It doesn't wanna lend [00:12:06] S1: It does. It does. [00:12:07] S0: Millions of pounds all of a sudden and not get it paid back.
00:12:07 · Amy Lewin, Tom Matsuda
[00:12:07] S0: Millions of pounds all of a sudden and not get it paid back. [00:12:09] S1: As as we've reported as well, their remortgaging product is... They're they're trying to make it as efficient as possible. So I think through a combination of income verification checks, user data, and data from credit bureaus as well, they're hoping to kind of give pre approvals to customers within five minutes. So obviously, if you're trying to go for that very quick approach, you need to manage the risk in some in some ways. [00:12:35] S0: But that said, if it comes in, if it knows that, if it undercuts other mortgage, you know, interest rates, you can see a lot of people potentially being driven by the price itself. And then Revolut is, like, really gonna start making money, isn't it? [00:12:48] S1: Yes. Yes. So so most big banks these days, if you look at their revenue profiles, they make most of their money from lending. Revolut is quite different in that regard because it makes most of its money from fee income to the services they provide. That could be things like interchange fees when you make card payment. It could be a fee on stock trading. That's been kind of Revolut's bread and butter so far. But if it wants to kind of continue that pace of growth, it's likely going out to have to lend and push into these more kind of grown up products like business lending and and mortgages.
00:12:48 · Tom Matsuda, Amy Lewin
[00:12:48] S1: Yes. Yes. So so most big banks these days, if you look at their revenue profiles, they make most of their money from lending. Revolut is quite different in that regard because it makes most of its money from fee income to the services they provide. That could be things like interchange fees when you make card payment. It could be a fee on stock trading. That's been kind of Revolut's bread and butter so far. But if it wants to kind of continue that pace of growth, it's likely going out to have to lend and push into these more kind of grown up products like business lending and and mortgages. [00:13:22] S0: Makes a lot of sense. And what what is Revolut's big end goal? Is is Storonsky on a mission to make this the biggest bank in the world? Is it more, you know, they've moved into telecoms. Is it potentially gonna become more of a sort of a super app play going to things outside of finance? What what do you think the the road ahead looks like?
00:13:22 · Amy Lewin, Tom Matsuda
[00:13:22] S0: Makes a lot of sense. And what what is Revolut's big end goal? Is is Storonsky on a mission to make this the biggest bank in the world? Is it more, you know, they've moved into telecoms. Is it potentially gonna become more of a sort of a super app play going to things outside of finance? What what do you think the the road ahead looks like? [00:13:44] S1: I mean, it it can be both, really. I mean, it obviously started with a mission to be this financial super app. But, know, obviously, going into telecoms, it might seem quite a strange move for a neobank to make, but it's... You know, they've they've done things like this in the past. They've launched eSIM products, but you can also do things like book your holiday via Revolut. You can get insurance for your pet if you really want to. You know, what it really is is like this control center for all your financial day to day. So telecoms might seem quite out there in terms of things, but, you know, it's it's a utility bill at the end of the day, right, which is a financial product. So it it makes sense in some ways to pivot into these products that are kind of tangentially linked to financial services. [00:14:28] S0: So another question that always gets asked about Revolut is when is it going to IPO? Where might it IPO? Is it going to be London?
00:14:28 · Amy Lewin, Tom Matsuda
[00:14:28] S0: So another question that always gets asked about Revolut is when is it going to IPO? Where might it IPO? Is it going to be London? [00:14:38] S1: I think Nik has been on the record in the past about criticizing the London stock exchanges as not really the place them and has publicly in the past said that if Revolut did IPO, it would be in The US. That seems to kind of reflect a wider move among other fintechs. Recently, just just to kind of compare the fellow neobanked, Darling, despite having most of its kind of customer base in UK, has has made more indications that it's willing to... Or look in The US if it were to IPO. [00:15:08] S0: And I found that really interesting because Storling doesn't even have a presence in The US at the moment, does it? And and when you speak to people like bankers, for example, that's always a big thing they point out. You know, they say everyone in the world or every every company in the world wants to IPO in The US. There's a huge queue of companies ready to IPO in The US when the markets really really open up again, and you need to be a really big business and ideally a business with a big customer base in The US in order to successfully list there. So so what's what's going on?
00:15:08 · Amy Lewin, Tom Matsuda
[00:15:08] S0: And I found that really interesting because Storling doesn't even have a presence in The US at the moment, does it? And and when you speak to people like bankers, for example, that's always a big thing they point out. You know, they say everyone in the world or every every company in the world wants to IPO in The US. There's a huge queue of companies ready to IPO in The US when the markets really really open up again, and you need to be a really big business and ideally a business with a big customer base in The US in order to successfully list there. So so what's what's going on? [00:15:41] S1: I mean, yeah, it's absolutely true. I mean, Starling doesn't have, you know, a kind of formalized retail banking offering in The US at the moment, but they are making pushes in the region. So Starling, alongside the kind of retail banking arm and their business banking arm as well, they have a software as a service product where they essentially sell the technology behind the bank to fintechs and also mid tier sized banks as well. And then currently kind of making a targeted push to take that to The US as well and even looking at possibly applying for a... Some sort of US banking license or making an acquisition to obtain a banking license that way. [00:16:22] S0: And what about Revolut's track record in The US?