Interviewed By The Asian Banker Live
Nikolay Storonsky, chief executive officer and co-founder of Revolut, a European emerging challenger bank, talks about the app-based bank's ambition to expand beyond Europe as well as its plans to issue fintech-as-a-service and wealth management products as well as cryptocurrencies.
Here is the transcript:
We started Revolut, two years ago the idea came from me. Going abroad, spending a few thousand quite. And then later I look at fees, how much I spent on banking fees, I was a kind a little bit shock because overall I almost like spend a few thousand dollars in banking fees. So, since then the idea was born. It took me approximately one year to get it done and we launched it on 2015. Now, we have almost one million customers, more than 10,000 businesses on the platform. And we're opening now about 3,000 accounts today.
If you look at all the banks in the world, they are at local. Revolut is effectively a branchless banking, which means every time I do transactions in any country, in any shop, we'll give you the best possible FX rates. You are not going to experience friction on any of your money transactions. So, if you want, you can send money globally for free, you can spend money for free as well.
The business, in terms of revenues, we have six types of revenues. Number one is interchange, which is commissions, so every time you spend through the card, we receive commission from shops on average, it’s about 1%. And then we also have a premium product, up to a certain, amount it's free. If you exchange or transfer to more than a certain amount and then exchange it half percent. And then, finally we do like cross some products, like premium accounts, we issue credit. We just started insurance. We will launch wealth management and cryptocurrencies etc.
I mean, if you mean by the scale in terms of profitability, we would be profitable if we wouldn't invest like a lot money on expansion and growing the team and adding new products to the platform. So, from this point, we already re-scale about, for us, one million users are nothing. We aim like for 100 million.
Right now we are in all European countries. We're launching in US, Canada, Singapore, Hong Kong, Australia, and New Zealand, Russia as well.
We actually provide an account, global banking account, which allows you to do what you want with your money. Plus, on top of it, financial services… can be in your wealth, it can be in trading, it can be insurance,etc. For us, like providing account just, you know a hook for our customer to provide the best possible FXrates and now we start offering other products that we have. So, we self-specific pin point, right? Which no one in the world is doing. We're the only one, we are the only effective bank account provider which use you interbank FX rates, the best possible FX rates. If you look at Alipay or Wechat, this isn't just solving the problem. Every time someone from China gets abroad, spends with the card, they’re going to use FX rates. So, we specifically solved this problem for them. So, by solving this problem, we can hook up customers and then we can sell them other products.
Initially we just started with trades and exports because these are our target audience. But then, people who experienced Revolut, they started using it everyday. Because their experience is great.
Initially, we launched a very simple product where you invest in ETFs, bonds and stocks ETF. And we effectively managed allocation for you. So, you can select like " I want to have aggressive allocation” oryou can select there a moderate one. And then we automatically rebalance your portfolio. In terms of experience, it's very sleek. It uses the same app. A couple of clicks you see how much you want to invest. It chooses yours investment style and then you're done. It's the initial product we launched and then later we add other products such as trading. You can buy and sell stuffs. You can invest money in properties, you can invest money in savings etc.
It’s in the same app. There is a section already wealth management. Then the beauty of that is all our customers can do that with only two clicks, they don't need to go through on-boarding process again, rather don't need to fund their accounts because there is already money on their accounts. So, for them it is very a seamless experience.
The way we've done this with Series B, $66 million from our investors issued on us, on top of that, we’ve raised another four million through crowd funding. Because there was a huge demand for our shares from our kind of customers, I think, overall, they committed more than $60 million in total like for 40,000 people who want to invest. And then we launched a lottery, randomly selecting people who can invest. And we ended up having 4,000 retail investors.
We are actually looking into issue fintech-as-a-service product so when everyone can effectively connect into Revolut platform through APIs. And do payments; build exciting things on top of it. Hopefully, we can launch it in December this year.
To be honest, we have probably like five to seven institutions approaching us a week. We already have enough few contracts prepared with a couple of institutions.
Yes. These institutions are in Europe for the moment. It will be more like we provide our infrastructure, we provide our licences, we provide our technology, our APIs. And then they can build products on top of our infrastructures. For example, to give you an idea, a lending company. We are working with a lending company at the moment who have millions of customers. And they wonder how to give them cards, and we opened APIs to them. and then they, ping it to the CPS, and they can effectively issue cards under their own brand but shall be powered by Revolut; then give it to their customers. Then all transactions will fit the lending app that they can issue. So, there are thousand opportunities which you can do. Another cool thing is, for example, any kind of delivery company, for example Uber or Deliveroo.Their riders second deliver food. They can be paid instantly, right. So that is how it help the business API proposition. So, say Uber gives Revolut accounts to all their drivers, and everytime when the riders complete a ride then Uber through APIs send money to the driver's account. And then money appears instantly. So everytime they complete a ride, you just receive money in your account.
Payment processor plus banking provider. So, like very wide range of solutions that we cover. What ApplePay and SamsungPay are more like built on top existing infrastructure. But the thing is that neither Apple nor Samsung, they don't provide new accounts. You can't pay in salaries, you cannot do whatever you want with your money. So, this simple, overlay, on top of our transaction, which provides better security, better payment experience. That's it. Way more much deeper.
Well, definitely expansion, as I’ve mentioned we are planning to expand in Asia and then Americas. We are issuing new products and I'm very excited about launching like crypto currencies as well, wealth management, and we’ll launch a premium version too. So, we will give a metallic card for our customers, fintech as a service as I mentioned. So, a lot of new initiatives and now we got quite a few teams working on different directions of different products.
So, we plan to become profitable now or next year. Somewhere August. But then again, it will depend on how fast we can grow. Because when you optimise for growth, you don’t optimise for profit. And with our state, we rather optimise for growth because it directly affects our organisation.
We're just looking to have as many customers, as so many businesses as possible on the platform.
To give you an idea, so right now, we on-board three and half thousand new accounts today. Then, in terms of volume, we processed more than $600 million a month in terms of volume. We on-board forty businesses a day and these figures are constantly rising. And the revenues compared to like last year at least ten times more. So business is growing very fast, there is a clear demand for the product. And now we just want to supercharge it with the international expansion. So, it will look like a lot of money from Series B, and we will put quite a majority of it in expanding the product outside Europe.
Yoyo Wallet is very different. Yoyo Wallet is more like a loyalty programme. Payment wallet but then again, it has different use cases. It's a loyalty programme. It's very much different from what we are doing. We effectively provide international bank accounts like for businesses and retail. Completely different use case. Also, licences are very different as well.
We will have e-money licence in Europe. We applied for a banking licence as well. So, we do a kind of, we are much deeper and wider, for example, we are able to provide credit to customers, wealth management as I mentioned. It's more like of a full standing bank. Yoyo Wallet is very specific customer loyalty programme.