Revolut — the London-based, Russian-led $5.5bn fintech unicorn — seems to be having an identification disaster.
Earlier this month the agency applied for a full UK banking license in order that it could begin to supply overdrafts, loans and totally fledged present accounts to its three million-plus British prospects. Over the previous yr or so Revolut has additionally employed a load of grandees from the world of conventional finance — corresponding to Aberdeen Asset Administration founder Martin Gilbert, now Revolut’s chairman, and former Goldman Sachs vice-chairman Michael Sherwood — in an obvious bid to shake off its repute for being unreliable and unprofessional, and to grow to be a grown-up monetary establishment.
And but it typically appears to behave extra like an adolescent.
The factor is, Revolut does already supply a number of good and smart providers for serving to prospects handle their cash, corresponding to budgeting and analytics instruments, “financial savings vaults” with first rate rates of interest (or first rate sufficient, given the occasions we dwell in), and a “linked accounts” function that permits you to see all of your varied financial institution balances in a single place.
However the issue is that none of these appear to make them very a lot cash. So in addition they supply a load of a lot much less smart options for serving to retail prospects tackle dangers, corresponding to cryptocurrency hypothesis, “commission-free” inventory buying and selling, and commodity buying and selling, below the class of “Wealth”.
The one two months that yet-to-make revenue Revolut has ever mentioned it has damaged even had been in late 2017 and in November 2020. Listed here are these two time intervals on a chart — guess what the chart is exhibiting?
Should you guessed one thing that rhymes with, er, match loin, you guessed accurately.
Revolut declined to inform us which segments powered its profitability in these two explicit time intervals, nor whether or not they had managed to remain within the black since November. However we do discover that their two months of profitability appear to coincide fairly neatly with the months by which the value of bitcoin immediately surges. So we are able to see why the corporate is so eager to push that exact class of
playing buying and selling.
They usually do actually push it.
That is what this severe monetary establishment despatched by way of push-notification to prospects on its app final week (you may see the identical factor on its blog):
Sure, Revolut needs its prospects to “have a good time” a milestone that actually doesn’t exist. We have said it before and we’ll say it once more: there is no such thing as a such factor as a “market cap” on the planet of crypto. Revolut goes on to share the “enjoyable reality” that “with Bitcoin main the cost, it makes up $762bn of the full market capitalisation – which is greater than Fb! ($754bn)”
Probably the most enjoyable details are all the time those that aren’t true.
Revolut goes on to current “3 methods Revolut makes buying and selling crypto fast and straightforward”, which actually appears like a plea for his or her prospects to become involved out there. Right here’s quantity three (emphasis ours):
It took Bitcoin 11 years to get to $20,000, however solely about 3 weeks to double that to $40,000. In 2020 alone, the worth of bitcoin grew by over 400%. You may get in on the motion from simply $1 – beginning small is OK! Keep in mind, the worth of belongings is variable and may go down in addition to up.
It has additionally taken lower than three weeks for the value of bitcoin to crash by about 25 per cent — it was buying and selling across the $31,000 mark at pixel time, down from a excessive of simply over $41.500 on January 8. However surprisingly, Revolut hasn’t notified this to their prospects.
Look, we perceive that Revolut is attempting to disrupt finance and to grow to be “the world’s first truly global financial superapp”, so to moan that they don’t seem to be behaving like a boring outdated financial institution might sound a bit of unreasonable.
However we additionally suppose it’s a bit of discordant for Revolut to concurrently be attempting to be taken critically as a spot that’s going to take care of your hard-earned cash, whereas additionally encouraging retail traders to become involved in extremely frothy markets.
Of the primary challenger banks which have emerged up to now few years within the UK, Starling Financial institution was the first to become profitable. It says its common steadiness in its shopper financial institution accounts is now £1,625 — that compares to a reported common steadiness of £250 for Revolut, and £359 for Monzo.
So why is Starling Financial institution doing so a lot better than its opponents? We expect the primary clue is within the title. The financial institution has been clear about what it’s providing from the beginning, and hasn’t tried to leap on any high-risk bandwagons, temptingly profitable as these is perhaps. It is perhaps much less thrilling than the opposite challenger banks, however its repute is one in all reliability and maturity.
To sum up: if Revolut actually needs to be taken critically as a financial institution, it wants to begin behaving like one.
Nonetheless, even when it hasn’t achieved that but, a minimum of the corporate portrays a severe picture in its advertising (screenshot from Revolut’s web site, below the “influencers” tab):
The virus has crushed the challenger bank dream – FT Alphaville
Revolut’s growing pains rumble on – FT Alphaville
No, bitcoin is not the “ninth-most valuable asset in the world” – FT Alphaville
Inside Revolut’s bid to be a bank – Sifted
Monzo: the bank that doesn’t want to be – FT Alphaville