Inside Revolut: 5 Banking and Payments Products Linked To UK’s Most Valuable FinTech

What started six years ago as a pre-paid debit card making it easy for customers to use their debit card anywhere in the world, in whichever currency they like, has evolved into a billion-dollar challenger bank that is now worth more than 53-year-old NatWest, one of the UK’s Big Four retail banks.

In July, London-based Revolut raised $800 million in funding at a $33 billion valuation, making the firm UK’s most valuable private tech company in history and one of the best-funded FinTechs not just in Europe but the world at large.

Read more: Revolut’s $33B Valuation Reflects The Promise Of Open Banking

The firm, which bills itself as a “financial super app,” launched in 2015 as a money-transfer service before expanding its services to include digital banking, stock trading, cryptocurrency features, among others, for its 16 million-plus customers worldwide.

The company’s goal is to use the new money from investors to expand into new products and markets, including the U.S. and India, a move similar to the path others like Swedish buy-now-pay-later startup Klarna have taken to diversify into a wider range of other services for consumers and businesses.

See also: Revolut CEO Sets Sights on Hiking Sales Before IPO

Earlier this month, Bloomberg reported that the startup would put off an initial public offering (IPO) until it has made billions of dollars in annual sales: “To be able to IPO successfully we need to be at least in the few billion dollars range of revenue a year,” Nik Storonsky, chief executive officer and co-founder said.

Storonsky added that the FinTech unicorn will need to expand to include more business verticals, with “more and more companies entering into a business model where they sell a lot of products rather than a single-line product.”

As of 2020, the company’s adjusted revenue was £261 million (about $354 million) but saw its operating losses double to £201 million (about $272 million) in 2020, driven by increasing staff costs amid its rapid growth worldwide.

In this piece, we delve deeper and look at the different products and services linked to the “financial super app” that is taking on traditional service providers with a more personalized and innovative service.

Open Banking

Revolut’s products include a digital banking service for its users, offering various options ranging from a free standard to a £12 Metal plan. Users can earn up to a 1% cash back, among other perks.

The firm has made it easy to sign up for its services, enabling users to open an account in less than a minute once their identity is confirmed. Users can also connect all their bank accounts to Revolut to easily monitor their money in one app.

In a bid to penetrate the broader U.S. market, the company announced that it had submitted a draft application for a U.S. banking license in California in March of this year while also launching Revolut Business throughout all 50 U.S. states.

Related news: Revolut Expands Its Digital Banking Services In The US

“An important part of Revolut’s plans to build the world’s first global financial super app, a U.S. banking license would allow Revolut to provide a broader range of financial products to U.S. customers, including overdraft protection, loans and deposit accounts,” a news release said at the time.

And since launching its app in the U.S. in March 2020, the firm has secured 300,000 customers, according to Ronald Oliveira, CEO of Revolut’s U.S. business.

Read more: Revolut’s US Credit Card Strategy Puts NeoBank Up Against New Challengers

The firm recently launched a new service for cross-border payments between the U.S. and Mexico, allowing U.S. users to send money at the real exchange rate via a standard international wire transfer (SWIFT transfer) to recipients in Mexico, where Revolut is not yet available.

Cryptocurrency

The Revolut cryptocurrency platform allows customers to “buy, sell, and send digital currencies at the touch of a button, with no hidden fees.” Users can invest in Bitcoin, Ethereum and other tokens with 30+ currencies and make trades starting with as little as $1.

Customers can stay on top of market movements, receiving notifications in the app when digital currencies reach their desired prices while storing their crypto savings in personal vaults offering up to 0.65% in annual interest paid daily.

Related news: Revolut Uses Bitcoin to Secure Its Largest US Office Space

Earlier this month, the U.K.-based financial super app used bitcoin to pay for its space in Dallas, Texas — its largest U.S. space so far — with flexible office provider WeWork, PYMNTS reported. The deal was the first time a WeWork enterprise client has used bitcoin, or any cryptocurrency, for payment.

Stock Trading

The company announced this month that it would debut commission-free stock trading for U.S. customers after obtaining a broker-dealer license through the Financial Industry Regulatory Authority. As an ‘introducing broker,’ the firm will rely on New Jersey-based fintech firm, DriveWealth to clear trade.

Read more: Revolut Offering Commission-Free U.S. Stock Trades

“We are building a single app where people can manage all aspects of their finances, from banking and foreign exchange to cryptocurrency and stock trading,” Storonsky reportedly told CNBC this month. “We’re eager to break down common barriers to entry around stock trading such as account minimums and complex interfaces.”

The service will be available in a few months and like competitors Robinhood and Square in the retail investing space, Revolut will earn payment for order flow revenue in the U.S., according to a spokeswoman, per the CNBC report.

Savings Vault

In July, Revolut announced the launch of a daily interest savings vault that allows UK customers with a Revolut standard plan to earn 0.15% daily interest on the money in their GBP vaults.

In addition to paying interest daily, users will benefit from the added flexibility of having no minimum commitments for deposit duration or a cap on the deposit amount.

Users can round up their card payments and deposit money or save their spare change in their Savings Vaults via recurring or one-off transfers.

“To date, Vaults have helped over 2.5 million people build towards their financial goals,” said Marsel Nikaj, head of savings at Revolut. “Now, we are excited to roll out Savings Vaults with daily interest and no fees to standard plan users to help them achieve their goals faster.”

Nikaj added that the firm was looking forward to making this product available to European markets in the coming months “to enable anyone to earn money on their savings, even in a negative interest rate environment.”

Buy Now, Pay Later

Instead of paying upfront for everything, Revolut users in Europe will soon have the option to spread the cost of online and in-store purchases over a period of time as the company targets an entry into the booming buy now pay later (BNPL) industry next year.

Once a niche form of credit, the payment method has garnered a lot of attention in the wake of the pandemic, and it has become a major payment method in several markets.

In the UK, for example, the use of BNPL products nearly quadrupled in 2020 and as of February 2021 stood at £2.7 billion, with 5 million Brits using the products since the onset of the pandemic, according to the country’s Financial Conduct Authority.