Why Revolut‘s presence in Belgium should not be underestimated
Revolut is currently living up to its name. The company gets the news everyday lately.
A few of the headlines in the last 30 days:
- “London fintech Revolut to launch in Asia-Pacific with regional headquarters likely in Singapore” (Business Times, 8 November, 2018)
- “Revolut uses machine learning tech to protect customers against ‘savvy’ card fraud crime” (Independent.ie, 8 December, 2018)
- “UK fintech unicorns in talks with Softbank” (The Times, 12 November, 2018)
- “The smartphone apps that will change the way you bank” (The Guardian, 24 November, 2018)
The deal with Softbank puts the value of Revolut at $1.7 billion.
Needless to say that we talk about highly ambitious company here, with investors that put their money in the dream/fear that Revolut will change the way the world banks, on a global scale.
These international ambitions were highlighted the last month by the announcement of the expansion in Asia-Pacific, and the American Dream that is estimated to take place in 2019.
The United Stated are a hard nut to crack though. It is exactly this American Dream that requires the new investments. Launching a bank all over USA should not be underestimated. Although we talk about one country here, reality is that we also talk about 50 states, with their own regulatory specificities and capital requirements.
2023 Ambition: 100 million customers
Global expansion is key for Revolut’s target of 100 million customers within 5 years. This global expansion, at this rate, is only possible by scaling what you already have, and what you are good at. In case of Revolut, that is technology. Technology must help them in better understanding their customers’ behaviour, fraud detection, and all kind of other ways to minimise human intervention whatsoever in the back-end.
Revolut founder and CEO Nik Storonsky said: “If you’re on a mission to reach tens of millions of customers and scale your business globally, then you cannot rely solely on manual human processes to effectively protect your customers against financial crime, especially as criminals are becoming more savvy in their tactics.”
On the front, they need to stay ahead of competition in terms of customer experience and ease of use, which they claim to be their USP compared to other players.
In June 2018, that is 5 years after the official launch, the company has grown to 2 million users. That is: 5 years to reach 2 million.
On November 12, they announced on Twitter to have already 3 million users, 5 months to achieve 1 million more!
I hear you say already: “Yes, but Revolut isn’t a bank, it is a e-money institution”. You are right, and this was also my remark in discussions on Revolut. Currently they provide payments and a crypto-currency exchange platform.
November was also the month that Revolut announced to have a country manager for Belgium. The product was already available for about a year. To boost further growth in Belgium, they appointed Steven Geclowicz as the new country manager of Revolut in Belgium.
I contacted Steven for a cup of coffee to get to know each other. We met last week in Antwerp. Steven truly symbolises what Revolut stands for. He is a young ambitious professional (24 years), with an international educational background and a brief work experience at Deliveroo, another young brand that is developed around technology and marketing.
To get the job, it was Steven that got in touch with Revolut. It was the right move, as he showed to have a right mentality and guts for for the role of country manager. His young age makes him the perfect fit with the young generation that Revolut is targeting today.
Steven helped me better understand why banks should not be too relaxed simply because Revolut does not have a banking license yet, or because they do not make a profit yet. They have such a big customer base, they have the necessary capital.
Just like any other new tech company, the business model is currently set up around scaling, scaling and scaling. Profits will come later, just like the license probably.
The fact that Steven got appointed shows once again Revolut’s ambitions. In Belgium, the brand has 30.000–35.000 customers, that is: without any marketing support. Voice of mouth has led to 30–35k customers. By adding on top of this the required marketing budget to convince the younger population, Steven has the ambition to lift this to 100.000 customers.
Revolut is becoming a serious threat to f.e. bpost bank’s bpaid on the young segment. Today Revolut can be be compared with a prepaid card system, linked to a crypto-currency platform. Their services costs, depending of the package you choose from 0 to 14,99€/month.
Today they are a payments and crypto provider. Next year, the consumer can expect also a trading platform, which is built on an in-house robo advisory service. It will make them a direct competitor with banks like MeDirect and Bank De Kremer.
From the moment they launch a credit offering, it will really become interesting to see how the market will react on Revolut’s steep way to heaven.
There is one key element, one serious constraint that is still keeping Revolut away from becoming a true competitor of the regular bank, and that is: having a local IBAN. The local IBAN is key for salary payments, direct debits… This is where ‘the incumbents’ are still ahead of this challenger.