Revoluts Ambitions Challenge Major Banks

Highlights:

• Rapid User Growth: Revolut Ltd. doubled its Australian user base to over 600,000 in the past 12 months and aims to reach 1 million accounts by year-end.
• Subscription Model: Revolut's unique subscription model offers benefits like higher foreign exchange limits and cashback, challenging traditional banks with its digital wallet.
• Revenue Surge: Group revenue doubled to $3.4 billion, with Australian revenue increasing by 166% and transaction volumes by 122%, despite scrutiny over corporate practices.

Doubling Users in Australia

Revolut Ltd., the global finance app, has identified Australia as its fastest-growing international market, with local users doubling over the past 12 months. Targeting Millennials and Gen Z, Revolut attracts these spenders with features like cryptocurrency and Wall Street functionality. The London-based fintech, which is considering an IPO, has over 600,000 Australian users and 45 million globally.

Subscription Model Success

Revolut’s unique subscription model offers benefits such as higher foreign exchange limits, cashback on debit card transactions, and discounted trading. Active in 38 countries, the digital wallet initially targeted overseas travelers with its wholesale foreign exchange rates. Revolut aims to reach 1 million Australian accounts by the end of this year, with monthly active users also nearly doubling.

Competing with Traditional Banks

“We compete with traditional banks,” said Revolut global CFO Victor Stinga. Despite holding $115 million in Australian customer balances at the end of last year, these funds are not government-guaranteed as Revolut is not yet a bank. An application for a banking license is under review by the Australian Prudential Regulation Authority, which would allow Revolut to hold deposits and pay interest on savings accounts. Lending is conducted under an Australian credit license from the Australian Securities and Investments Commission.

Future Plans and Revenue Growth

Stinga did not comment on the progress of the APRA banking license or a similar application in Britain. The company has faced scrutiny over its corporate culture and accounting practices. Nonetheless, group revenue doubled to $3.4 billion last year, with net profit rising to $645 million. In Australia, revenue increased by 166% and transaction volumes by 122%, reaching $660 million. CEO Matt Baxby highlighted ongoing discussions with APRA, emphasizing that a bank license would enhance consumer confidence but the digital wallet remains popular.

Revolut’s Unique Offerings

Revolut's subscription model saves users from hidden fees charged by traditional banks. It competes with other digital wallets like Wise and Up. A standout feature is Revolut’s metal cards, seen as a status symbol in Europe. Shareholders include SoftBank, Tiger Global Management, TCV, Balderton Capital, Ribbit Capital, and Molten Ventures.

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