Revolut, the UK’s $1.7 billion star fintech, has big dreams as it takes on the American market
- London’s Revolut was founded only three years ago, but it already has 3 million customers and is aiming for 100 million customers in the next five years.
- The challenger bank is set to hit the US market in early 2019, and it says 75,000 people are already on the waiting list.
- “We want to one of the largest financial services companies in the world,” CEO Nikolay Storonsky said.
An app-based banking alternative in the UK valued at $1.7 billion has plans to grow even bigger. Just three years old, it’s hitting the US early next year to continue its rapid expansion.
Revolut, founded in 2015 by developer Vlad Yatsenko and former Lehman Brothers and Credit Suisse trader Nikolay Storonsky, already has 3.2 million customers, and the company boasts that it has long waiting lists outside Europe. Dubbed “the Amazon of banking,” Revolut raised $250 million earlier this year and has reportedly lured a potential $500 million investment from Japan’s SoftBank.
The London-based company allows users to spend money worldwide in 150 currencies at a real-time exchange rate, with no fees, through a debit card. CEO Storonsky outlined his goal of seeing the bank reach 100 million customers in the next five years and break into North American and Pacific markets in the coming months.
“We want to be one of the largest financial services companies in the world and continue our expansion,” Storonsky said in an interview with Business Insider. “That’s my dream.”
The US market has long been on Revolut’s list for expansion, he said, but with significantly higher barriers to entry than Europe, progress has been slow. The company had originally planned to expand into the US by the end of 2018 but is now expecting a rollout early next year, in late March or early April.
Among the hurdles: US regulations require domestically issued debit cards to use a different interbank messaging system — basically how banks send and receive information such as money transfers — from the rest of the world. And US debit cards must have at least two networks to be compliant. Rather than partner with a US provider, Storonsky said Revolut opted to build its own US-based processor.
The company will decide soon which bank to partner with in the US as part of its offering.
“Regulation is key — in the UK, it’s very quick,” said Storonsky, who holds a masters in economics from the New Economic School in Moscow. “But as you become a big organization, regulators pay much more attention, which can slow things down.”
In addition to the US, Revolut plans to expand to Canada, Australia, New Zealand, Hong Kong, Singapore, and Japan in 2019. The company recently announced it had recieved a Remittance License from the Monetary Authority of Singapore, as well as Stored Value Facility approval, and also noted it had been fully authorised by Japan’s JFSA boosting its expansion plans.
Storonsky declined to comment on any potential SoftBank investment and was coy on the prospect of future funding.
“It depends how much investors are willing to invest,” he said. “We’re open to new investors, but them having a good reputation is important.”
Previous Series C funding was led by DST Global, the investment vehicle of Russian billionaire Yuri Milner, who was an early investor of Facebook, Twitter, and Spotify, among others. Existing Revolut investors Index Ventures and Ribbit Capital also took part in the financing.
So far, Revolut’s success has been built on its low-fee, multicurrency platform. But Storonsky sees cryptocurrencies, already on offer via Revolut, as an enduring part of the company’s future. Cryptocurrencies have plunged in 2018, with their combined market cap now at $130 billion, down from a high of $800 billion in January, according to research site CoinMarketCap.
“Banks are still very risk-averse of crypto, institutional funds as well,” Storonsky said. “As a result, Wall Street is not really interested — there is no demand from institutional clients.”
On the product side, Revolut offers customers three options: a free account, a premium account, or the recently introduced metal account. The latter provides users with unlimited exchange in 24 fiat currencies, as well as five major cryptocurrencies: bitcoin cash, bitcoin core, ethereum, litecoin, and ripple.
Storonsky said that Revolut has managed to sidestep the Brexit snags that have impacted a large number of other UK fintechs. The firm has applied for a European banking license from the Bank of Lithuania and is considering an application for an electronic-money license in Luxembourg as part of its plans to reduce any Brexit-related issues.
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