The Next Stage podcast by Web Summit
00:00:00 · Luke, Alastair Marsh, Nik Storonsky
[00:00:00] S0: Hello, and welcome to the Next Stage podcast by Web Summit. My name is Luke, and today we'll be hearing from entrepreneur and founding CEO of digital banking startup Revolut, Nikolay Storonsky. Nikolay took to the stage at Web Summit twenty nineteen to discuss finance in all its forms, the future for digital banking, and what the future holds for Revolut and all its competitors. [00:00:20] S1: Hi. Good afternoon, everyone. I'm Alastair Marsh, reporter with Bloomberg in London. I cover crypto and blockchain. And I'm joined by a gentleman that is probably very well known here, Nik Storonsky, who's the Co Founder and CEO of Revolut, as we've just heard. Nikolay, I wonder if, as I say, I guess you're very well known in this room. But for those who don't know you, could you briefly introduce yourself, tell us about Revolut, and tell us how the company got into crypto? [00:00:47] S2: Sure. So my name is Nik. I'm founder and CEO of a company called Revolut. So Revolut is effectively digital bank which provides you all financial services the banks provide. And on top of it, we do much more, for example, crypto. So I started it about three years ago. Now we have more than 3,000,000 customers across Europe. We're opening 8,000 to 10,000 new accounts a day. Transaction volume is more than $3,500,000,000 a month at the moment, and we are expanding outside of Europe as well.
00:00:47 · Nik Storonsky, Alastair Marsh
[00:00:47] S2: Sure. So my name is Nik. I'm founder and CEO of a company called Revolut. So Revolut is effectively digital bank which provides you all financial services the banks provide. And on top of it, we do much more, for example, crypto. So I started it about three years ago. Now we have more than 3,000,000 customers across Europe. We're opening 8,000 to 10,000 new accounts a day. Transaction volume is more than $3,500,000,000 a month at the moment, and we are expanding outside of Europe as well. [00:01:21] S1: Fantastic. Okay. One of the headlines recently around Revolut has been that the company has achieved unicorn status, this kind of mythical and wonderful achievement for a fintech to have a valuation of more than $1,000,000,000 you talk to us a little bit about how much or how significant the crypto business was in achieving that milestone? And also, what proportion of future revenue and profits do you expect to come from your involvement in the crypto space?
00:01:21 · Alastair Marsh, Nik Storonsky
[00:01:21] S1: Fantastic. Okay. One of the headlines recently around Revolut has been that the company has achieved unicorn status, this kind of mythical and wonderful achievement for a fintech to have a valuation of more than $1,000,000,000 you talk to us a little bit about how much or how significant the crypto business was in achieving that milestone? And also, what proportion of future revenue and profits do you expect to come from your involvement in the crypto space? [00:01:49] S2: Sure. So we launched Crypto December last year, so it's about ten months ago. It was great, So there was a lot of demand, a lot of volume coming through the platform. So this year, it's much less due to high coming off. Overall, we still produce quite good volumes, while they are 20%, 30% compared to the level it was before in December. In terms of revenues, I mean, it's not that significant for us. It's less than 10% of revenues comes from crypto business. And in terms of valuation, I mean, my experience with investors was, I mean, at least when we raised money, they didn't really care about this business. Because we perfectly position ourselves as a bank, not as a crypto business.
00:01:49 · Nik Storonsky, Alastair Marsh
[00:01:49] S2: Sure. So we launched Crypto December last year, so it's about ten months ago. It was great, So there was a lot of demand, a lot of volume coming through the platform. So this year, it's much less due to high coming off. Overall, we still produce quite good volumes, while they are 20%, 30% compared to the level it was before in December. In terms of revenues, I mean, it's not that significant for us. It's less than 10% of revenues comes from crypto business. And in terms of valuation, I mean, my experience with investors was, I mean, at least when we raised money, they didn't really care about this business. Because we perfectly position ourselves as a bank, not as a crypto business. [00:02:38] S1: I see. Okay. Fine. One criticism about the offering that you have in and I wondered if you could maybe talk a little bit about this, is that it was structured so that you couldn't do wallet to wallet transfers, I. E, if you had a Bitcoin in your Revolut account and you wanted to monetize that, you couldn't transfer it out. You had to convert to fiat and take it out. Could you explain a little bit why it was structured that way? Would you change it? What was the thinking behind that, please?
00:02:38 · Alastair Marsh, Nik Storonsky
[00:02:38] S1: I see. Okay. Fine. One criticism about the offering that you have in and I wondered if you could maybe talk a little bit about this, is that it was structured so that you couldn't do wallet to wallet transfers, I. E, if you had a Bitcoin in your Revolut account and you wanted to monetize that, you couldn't transfer it out. You had to convert to fiat and take it out. Could you explain a little bit why it was structured that way? Would you change it? What was the thinking behind that, please? [00:03:06] S2: I mean, the reality, because we partner with many banks, we partner with Visa and Mastercard as well, and they simply didn't allow us, right? Officially. So we fought very hard about it. With reality, we lost, right? And then as a result, you can only buy and sell crypto within our account. You can't load crypto, you can't withdraw. So right now we're trying to effectively make a business case where we allow people to withdraw crypto to other crypto wallets. And if we win, then next logical step will be to allow people to load crypto. And then the reason why banks and those schemes are afraid of loading crypto is obviously they're old fashioned, very risk averse. And their compliance people don't know technology. As a result, they don't know what tools to exist to, for example, to do suspicious transaction monitoring on crypto nodes. And they just tell, you can't do it. Okay.
00:03:06 · Nik Storonsky, Alastair Marsh
[00:03:06] S2: I mean, the reality, because we partner with many banks, we partner with Visa and Mastercard as well, and they simply didn't allow us, right? Officially. So we fought very hard about it. With reality, we lost, right? And then as a result, you can only buy and sell crypto within our account. You can't load crypto, you can't withdraw. So right now we're trying to effectively make a business case where we allow people to withdraw crypto to other crypto wallets. And if we win, then next logical step will be to allow people to load crypto. And then the reason why banks and those schemes are afraid of loading crypto is obviously they're old fashioned, very risk averse. And their compliance people don't know technology. As a result, they don't know what tools to exist to, for example, to do suspicious transaction monitoring on crypto nodes. And they just tell, you can't do it. Okay. [00:04:06] S1: Another milestone or another big news point around Revolut is the application for a banking license and moving towards a bank, which you just mentioned. Can you talk a little bit about the progress with regard to that? And will having that license allow for a differentiated crypto offering from what you've just said? And obviously, you said that the existing partners perhaps complicated what you may have wanted to achieve. Will having your own banking license get over those hurdles, do you think?