Banking Without Borders
00:00:00 · Jonny Pease, Nik Storonsky
[00:00:00] S0: Hey, everyone. It's Jonny here, and welcome to another episode of Banking Without Borders. My cohost, Jan, is away this week, so I thought instead I would share an audio version of our latest deep dive into Revolut. This episode is adapted from a YouTube video, so you might hear the occasional reference to visuals or on screen moments, but the story holds up in audio. We're gonna kick things off with a quote from Nik Storonsky, Revolut's CEO and cofounder, as he reveals a pretty ambitious and frankly shocking vision for his company. From there, we'll break it down, looking at what it would take to achieve, what's standing in their way, and whether this goal is even possible. And if you do want to watch the original video, I'll link it below in the show notes. Thank you. [00:00:41] S1: If you if you think in numbers, we just want Revolut to be number one global bank in 100 countries with 100,000,000 daily active customers and then 100,000,000,000 revenues a year.
00:00:52 · Jonny Pease
[00:00:52] S0: That sounds impressive. But let's break this down because this goal is absolutely insane. Revolut is growing fast. In 2024, they hit 50,000,000 customers, adding over 10,000,000 in a single year. And at that pace, they're on track to reach 100,000,000 by 2028. But here's the real challenge. In 2023, they generated $2,200,000,000 in revenue. So even if they double their users and maintain the same revenue per customer, they're still nowhere near 100,000,000,000. So the problem isn't getting more users. That's easy. It's figuring out how to 50 times their revenue. Ignition sequence. Because as it stands, Revolut is a rocket ship, but $100,000,000,000 is a whole different galaxy. Just quickly before I begin, if you do enjoy our content, then please consider subscribing. Right now, less than 2% of you are. So if you'd like to support myself and the channel, then please like the video and hit subscribe. Over the past two years, Revolut has dominated the fintech space. Revenue grew throughout 2023 with record profits of over 500,000,000 and a net profit margin of 19%. They hit 50,000,000 customers in 2024, expanded into 39 markets, and finally secured a preliminary UK banking license. But the numbers only tell part of the story. And alongside global expansion, they've launched new features. Last year, they became the first financial institution to introduce eSIMs. Then came Revpoints, a loyalty program rewarding users with perks like airline miles and discounts. And the introduction of mobile wallet made sending money internationally to countries like Bangladesh and Kenya even easier. Of course, you are sending money internationally, Revolut might not be the cheapest and I highly recommend using the Monito app. We'll compare hundreds of providers in real time, check speeds, what deals they have on, and the rates they're using. And if anything changes, perhaps there's a better rate available or a new offer, then we'll send you a notification so you're always getting the best deal. I'll put a link to the Minito app in the description box below. One product feature I was excited about was wealth protection, a biometric security feature that protects your money from pickpockets and phone snatches.
00:02:57 · Jonny Pease, Nik Storonsky
This adds an extra layer of security, especially if you live somewhere like me in London where a phone is stolen every six minutes, which means by the time you finish watching this video, at least three people will be walking home empty handed. They also doubled down on crypto with Revolut X, a standalone platform separate from their main app. But let's put this all into Even Binance, the world's largest crypto exchange, only pulled an estimated $12,000,000,000 in 2022, which means that even if Revolut's crypto business exploded and became bigger than Binance, it still wouldn't be anywhere near a 100,000,000,000. And that's the issue. None of these new features, not eSIMs, Revpoints, or Revolut X are anywhere close to game changing enough to 50 times their revenue. Right now, Revolut is making about $58 per customer per year. To reach a 100,000,000,000, they'd either need to get 1,700,000,000 customers or they'd need to massively increase revenue per user. So what's the real plan? Will they hike fees to squeeze more out of each customer, double down on lending and mortgages like a traditional bank, or is there a completely new business model we haven't seen yet? [00:04:06] S1: So it's definitely doable because market is so huge and banks are very fragmented, I would say, so they're not really competing globally.
00:04:14 · Jonny Pease
[00:04:14] S0: That's the key idea behind Revolut's entire strategy. Right now, most banks operate domestically with strict regulations that limit them to their own markets. Revolut's plan is to break down those barriers, create a global bank that works seamlessly across 100 countries. And in theory, that could be their path to a $100,000,000,000. HSBC, the world's local bank. But here's the reality check. HSBC, the so called world's local bank, at least according to every airport airbridge in the world, made $66,000,000,000 in 2024. That's huge. But what's even more interesting is that HSBC has fewer customers than Revolut, yet it makes 30 times more money. And this proves something crucial. It's not just about how many customers you have, it's about where you make your money. And for legacy banks like HSBC, those revenue drivers are obvious. We have lending and wealth management, business lending and corporate finance, and investments and global markets. Mortgages, personal loans and credit cards are massive drivers of revenue, especially during periods of high interest like we have right now. Then we have wealth management for the ultra rich. These clients aren't just opening savings accounts, they're investing millions through HSBC's wealth management services. So I'm talking investment portfolios, estate planning and tax strategies. These are all services that HSBC offer, take a cut and make a lot of money from. And Revolut? Well, they're already making moves into all of this. In an interview in the Feet, Storonsky confirmed that by 2025, they're planning to launch mortgages in countries like Lithuania, Ireland and France. And mortgages make sense because you're talking long term, high value loans that generate steady interest income. But before they can hand out mortgages, Revolut has a big problem to solve. They need to bulk up their balance sheet. Which product would you most like to do? Private bank?
00:06:02 · Nik Storonsky, Jonny Pease
[00:06:02] S1: I think it's critical to build a private bank. [00:06:04] S0: And because of job listings on their website, we have confirmation that they're making moves into this market. And this could be seriously lucrative. In 2024, the private banking market was valued at $432,000,000,000, and it's expected to reach over 1,000,000,000,000 by 2034. So this presents a massive opportunity for Revolut as they push towards a 100,000,000,000 in revenue. But one reason I believe Storonsky thinks it's critical to build a private bank is for the deposits. According to their last financial report, Revolut had 38,000,000 customers with total balances of £18,200,000,000. That sounds impressive, but when you break it down, the average customer holds just £480 in their account or roughly $620. So while Revolut has a massive customer base, most users aren't treating it as their primary bank, and that's a major obstacle if they want to expand into lending, mortgages, and private banking. But Storonsky did go on to say [00:06:58] S1: A lot of customers actually have a lot of balances with us. Some of them have, you know, millions on our accounts.
00:07:03 · Jonny Pease
[00:07:03] S0: So according to Nikolay, some customers do store millions with Revolut. And these deposits aren't just valuable because of the wealthy clients themselves, but because they give Revolut the liquidity to expand its lending business at scale. Because the more deposits Revolut holds, the more they can lend. And this is where the real opportunity lies, not just in personal lending or mortgages, but in business lending and corporate finance. And this is where I think Revolut could really scale. In 2024, HSBC's Commercial Banking division, which handles business loans, corporate finance, and international trade, brought in $11,900,000,000 in profit before tax. And that's not just big corporations. HSBC lends to everyone from mom and pop stores to multinationals. And right now, Revolut does have business accounts, but they're mostly for payments and expense management. They don't offer business loans or overdrafts, which means they are missing out on one of the most profitable parts of banking. But that might be about to change. Because they've announced plans to launch business credit products in Europe. And this could be huge. Because by entering the business lending market, Revolut are positioning themselves to capitalize on an industry that's expected to grow from $17,600,000,000,000 to 47.2 by 2031. So for Revolut, even a fraction of this market could be transformative. But is this enough to get them to a $100,000,000,000? Well, it's certainly a step in the right direction. But Revolut is still missing one major piece of the puzzle because traditional banks don't just make money by lending it out. They make money by moving it, investing it, and controlling it at scale. Take HSBC's Global Banking and Markets division. In 2024, they made $7,100,000,000 in profit before tax. And this is where real money moves. So I'm talking investment banking, corporate finance, and raising billions for huge deals. So think Elon Musk buying Twitter. But how does Revolut fit into this? Well, they've already made some moves. We mentioned RevolutX earlier, they have stocks and commodities trading for customers. But retail trading alone won't get them to a $100,000,000,000. Because while apps like Robinhood and eToro have built massive trading businesses, their revenues combined don't even come close to what JPMorgan makes from investment banking.