00:28:23 · Zubin Vandrevala, Aman Narain
[00:28:23] S1: And, Aman, it doesn't need to be. Right? And this is only as useful as a number of things it can do for you. So, Storling can talk about your current account. Revolut can talk about your account, your shares, your crypto, your travel, your phone plan, and your subscriptions. [00:28:39] S0: I think this is super powerful and completely underrated. So, eleven years of the super app looked very cluttered. And then AI, I was just listening to Dreamforce where Benioff was talking about how they had so many different features, and AI is outing those features. So, similarly, I think what's happening here is that when you have a super app which looks very cluttered, AI turns that clutter, if you'd like, into a moat for Revolut, potentially. [00:29:09] S1: That's true, right? That's the non obvious bit. The breadth has made the app confusing. It's exactly what makes the assistant useful. [00:29:16] S0: And once you talk to your bank, the app redesigns stop being the battleground, and the menu goes away. The product shelf is... What is that? [00:29:24] S1: That's right. Which is the challenge to the laggards, the treads, the neos, alike. Right? We can't prompt engineers your way to build a product you haven't. [00:29:33] S0: And one caution, because it's the theme of the hour. Version one mostly answers questions and does simple things. The day it moves money on its own, so does the risk move with it.
00:29:33 · Aman Narain, Zubin Vandrevala
[00:29:33] S0: And one caution, because it's the theme of the hour. Version one mostly answers questions and does simple things. The day it moves money on its own, so does the risk move with it. [00:29:45] S1: Right. And and and the one thing it can't do yet is tell a real policeman from a fake one. And so in in 02/2023, he pointed the same machine at Capital, QuantumLight, with Ilya Kondrushchev. I think I got that right. An algorithm called AliPREED's company's performance signals instead of taking pitch meetings. There was scientific approach rather than a human judgment. [00:30:11] S0: Lending, hiring, investing. He's taken the human judgment out of all of those three. [00:30:16] S1: Yeah. And the question the researchers couldn't answer. Right? Revolut sees 80,000,000 people spending. Alep reads performance signals. Nothing public describes the wall between the two. And honestly, the data flows. Right? So I can't really say... I'm saying nobody outside can tell you why it doesn't. AI runs deeper than AIR. Revolut says it uses it for sport, financial crime, and cross selling. So the function where compliance chiefs keep leaving is now run-in part by the thing that doesn't leave. [00:30:49] S0: And that's not criticism. It's the logic completing itself. If if if the humans are the most complex thing in the building, the humans are what you automate. [00:30:58] S1: Which leaves one thing. Right? Risk doesn't vanish. It it conserves. And if it's gone from the balance sheet, the hiring floor, and the investment community, Where did it go?
00:30:58 · Zubin Vandrevala, Aman Narain
[00:30:58] S1: Which leaves one thing. Right? Risk doesn't vanish. It it conserves. And if it's gone from the balance sheet, the hiring floor, and the investment community, Where did it go? [00:31:10] S0: Well, to answer that, Zubin, I'll have to take you back to Canary Wharf. A few months ago, I was standing there with a coffee looking up at the old Reuters block, and the one with the new sticker wrapped around it, it has now got the Revolut name on it. [00:31:26] S1: Quite a lot. I walked it... Past it last week, and the thing that strikes you is that nobody looks at it as a starter block anymore. [00:31:34] S0: Exactly. And and looking around that plaza, you'll you'll see the whole life cycle. It's quite poetic. A few minutes walk away is the HSBC tower where, you know, I used to live and take meetings, on which HSBC is planning to leave when the lease runs out. And then behind me, 25. You mentioned it. Lehman's. [00:31:54] S1: Funny thing. I was with the Visa folks. They're moving to Canary Wharf to be closer to the banks. So maybe there's something there. [00:31:59] S0: Yeah. They should they should check their email. [00:32:02] S1: But, well, that's a lot of financial history for one flat white, my friend. [00:32:06] S0: It's a very large flat white, Zubin. But look, it drove home what Revolut is actually attempting. This isn't new. It's the oldest ambition in banking to be everywhere. [00:32:18] S1: Yeah. Like, I mean, Standard Chartered, the HSBC, you and I worked in
00:32:18 · Zubin Vandrevala, Aman Narain
[00:32:18] S1: Yeah. Like, I mean, Standard Chartered, the HSBC, you and I worked in [00:32:22] S0: A century and a half ago, the Chartered Bank got its royal charter in 1853 to follow trade to India and China. HSBC was founded in Hong Kong in 1865 for the China Coast trade. You know? Having worked for both of those institutions, I can tell you they they grew up by following physical ships. [00:32:44] S1: Yeah. And where has Citi went after the customer? [00:32:47] S0: Citi actually is the one I want to drive home because it did it differently, you know? Walter Wriston took the bank Global from 1967, but the man who really made it the global consumer bank we know it as was John Reed. And Reed grew it with technology, not trade. [00:33:08] S1: This is your New York banker from 1977. [00:33:12] S0: Go on. You earned it. [00:33:14] S1: Right. So Reed takes over Citibank's consumer business in the mid seventies and wants twenty four hour machines that customers will actually trust. Now this is 1977. Nobody sells one that is good enough. So what does he do? Citi builds its own hardware, writes its own software. And in 1977, the first one goes live at a branch in Queens. [00:33:36] S0: Built their own because the market didn't sell what they needed. Sounds familiar. [00:33:41] S1: Yeah. Which is, I guess, Revolut people. It's the Spanish ATM, the same instinct forty eight years apart.
00:33:41 · Zubin Vandrevala, Aman Narain
[00:33:41] S1: Yeah. Which is, I guess, Revolut people. It's the Spanish ATM, the same instinct forty eight years apart. [00:33:47] S0: And here's the detail I love, Zubin. Reed later reckoned they spent maybe $200,000,000 on those machines and the network behind them. And when he was asked whether shareholders objected, he said they had no real voice in those days. [00:34:02] S1: Which is revolute for the last eleven years. Private, no quality calls, a founder who can put ATMs in Madrid because nobody gets to work. [00:34:12] S0: And keep that thought. It comes back at the end. Now Reed had a phrase for the rest of it. Success transfer. Build an idea in one country and then ship it to the next. ATMs, cards, and then Citi Gold, a wealth offer for affluent customers that started in Asia and was exported across the network. Citi's private banking rung forty odd years before Revolut. [00:34:38] S1: So card, app, ATM, private bank, ship it to the next country. That's the Revolut roadmap with, I guess, a nineties, haircut. And the slogan comes with it. Right? Citi never sleeps, twenty four hour bank, banking as a brand, decades before anyone said it was.
00:34:38 · Zubin Vandrevala, Aman Narain
[00:34:38] S1: So card, app, ATM, private bank, ship it to the next country. That's the Revolut roadmap with, I guess, a nineties, haircut. And the slogan comes with it. Right? Citi never sleeps, twenty four hour bank, banking as a brand, decades before anyone said it was. [00:34:56] S0: You know? Zubin, Sonorsky is doing it in plain sight. The Spanish ATM came with a stated plan to take them to Germany, Italy, Portugal next. That's success transfer in a press release. Now let's look at the heirs of what the three banks are doing today. April 2021, Citi announces it's leaving consumer banking in 13 markets, 14 with Mexico. Jane Fraser's reason, they don't have the scale to compete. And the line of hers, I love this, I'd put it on a T shirt, the second T shirt, Nostalgia is not a strategy. [00:35:35] S1: Which is the one thing that she and Storonsky would violently agree on, I guess. Violently. [00:35:42] S0: Two people reading the same two hundred years and refusing to be sentimental about it. She closes 13 markets. He opens 40. Same refusal. Opposite strategy. [00:35:54] S1: HSBC sold its French retail bank, you know, completed on the 01/01/2024 at a loss of, what, up to €2,000,000,000, sold Canada to RBC, pulled out of the mass market retail in America. And so... [00:36:08] S0: Yeah. Yeah. And Standard Chartered in 2022 announced a full exit from seven markets across Africa and The Middle East, Angola, Zimbabwe, which together made about 1% of the group's income. Then retail into Botswana, Uganda, and Zambia, all up for sale.