Revolut – the Russian-led, London-based, $ 5.5 billion fintech unicorn – appears to be having an identity crisis.
Earlier this month, the company applied for a full UK banking license so it can start offering full-fledged overdrafts, loans and checking accounts to its more than three million UK customers. Over the past year, Revolut has also hired a host of greats from the traditional financial world – such as Aberdeen Asset Management founder Martin Gilbert, now chairman of Revolut, and former vice chairman of Goldman. Sachs Michael Sherwood – in an apparent attempt to shake its reputation for being unreliable and unprofessional and becoming a grown-up financial institution.
And yet he often seems to behave more like a teenager.
The point is that Revolut already offers a lot of useful and thoughtful services to help clients manage their money, such as budgeting and analysis tools, “savings boxes” with decent (or enough) interest rates. decent, considering the times we live in), and a ‘linked accounts’ feature that lets you see all of your different bank balances in one place.
But the problem is, none of these seem to make them much money. They therefore also offer a host of much less sensitive features to help retail clients take risks, such as cryptocurrency speculation, “commission-free” stock trading and commodity trading, in the category “Wealth”.
The only two months that Revolut has yet to make a profit reported breaking even, late 2017 and November 2020. Here are those two time periods on a graph – guess what the graph shows?
If you guessed anything that rhymes with, uh, lanyard adjustment, you guessed it right.
Revolut declined to tell us which segments fueled its profitability during these two particular periods, or whether they have managed to stay in the dark since November. But we note that their two months of profitability seem to coincide quite well with the months in which the price of bitcoin suddenly rises. So we can see why the company is so keen on pushing this particular category of
And they do really push it.
Here’s what this serious financial institution push notification to customers on their app last week (you can see the same on their blog):
Yes, Revolut wants its customers to “celebrate” a milestone that literally doesn’t exist. We’ve said it before and we’ll say it again: there is no such thing as “market capitalization” in the crypto world. Revolut goes on to share the “fun fact” that “with Bitcoin in the lead, it represents $ 762 billion of total market cap – which is more than Facebook! ($ 754 billion) “
The funniest facts are always the ones that aren’t true.
Revolut goes on to showcase “3 Ways Revolut Makes Crypto Trading Fast and Easy,” which really sounds like a plea for their clients to get involved in the market. Here is number three (emphasis added):
It took Bitcoin 11 years to hit $ 20,000, but only about 3 weeks to double that figure to $ 40,000. In 2020 alone, the value of bitcoin has increased by over 400%. You can get in on the action for as little as $ 1 – starting small is OK! Remember that the value of assets is variable and can go down as well as up.
It also took less than three weeks for the price of bitcoin to collapse by around 25% – it was trading around the $ 31,000 mark at pixel time, down from just over $ 41,500 on January 8. But strangely, Revolut didn’t. t notified this to their customers.
Look, we understand that Revolut is trying to disturb finance and become “the first truly global financial superapplication,” so complaining about not behaving like a boring old bank might seem a little unreasonable.
But we also think it’s a bit jarring for Revolut to simultaneously try to be taken seriously as a place to look after your hard-earned money, while also encouraging retail investors to get involved in markets. very sparkling.
Among the main challenger banks that have emerged in recent years in the UK, Starling Bank was the first to become profitable. He claims his average balance on his consumer bank accounts is now £ 1,625 – which compares to an average reported balance of £ 250 for Revolut and £ 359 for Monzo.
So why is Starling Bank doing so much better than its competition? We think the main clue is in the name. The bank has been clear on what it is offering from the start and has not tried to get into a high risk routine, as tempting as that may be. It may be less exciting than other challenger banks, but its reputation is one of reliability and maturity.
To sum up: if Revolut is to really be taken seriously as a bank, it has to start behaving as such.
Still, while it hasn’t hit that target yet, at least the company paints a serious image in its marketing (screenshot from Revolut’s website, under the ‘influencers’ tab):
The virus crushed the dream of the challenger bank – FT Alphaville
Revolut’s growing pains rumble – FT Alphaville
No, bitcoin is not the “ninth most valuable asset in the world” – FT Alphaville
Inside Revolut’s application to become a bank – Sifted
Monzo: the bank that doesn’t want to be – FT Alphaville