Digital competition between fintech subversives, bigtechs and banks will also be discussed at the Portfolio Banking Technology conference on October 13th. Register here!
Revolut is a global financial platform with more than 16 million customers worldwide and is now using the European banking license in Hungary.
– read in the company’s communication. As a result, the security of the deposits of Hungarian visitors who upgrade their existing services to Revolut Bank is guaranteed by a deposit insurance system. To our question, Joe Heneghan, CEO of Revolut Bank, said switching to Revolut Bank is free for users.
The transition will take only a few minutes of usage, as promised by the company. Hungary is the 14th country in the world where the company has made the service of Revolut Bank available, but it has not stayed here, in the near future, according to the company’s CEO, they will continue to expand in Western European countries.
“The launch of Revolut Bank in Hungary will provide greater security and confidence for our recipients, and it allows our company to launch many new products and services in the near future”Said Joe Heneghan, head of Revolut Bank, according to the announcement.
The current announcement brings two important changes:
- disappears a very important counter-argument related to the Revolut account, namely that until now the traditional deposit insurance system did not include the stored amount of revolution accounts, but now at that level there is also expected amount of deposits received by those who switch to Revolut Bank. This has convinced many skeptics so far that it is worthwhile and already certain to keep the money in a revolutionary account.
- fintech may conquer new traditional banking areas with services, primarily credit card loans and personal loans (see below for details), but will gradually enter other other banking areas. Given its potential customer base of 500,000, Revolut could emerge as a serious competitor in all “challenged” areas.
Revolutionary loans – From travel to neobanking
At first, fintech helped international travelers to meet the high fees associated with currency exchange, but later added banking, stock and cryptocurrency functions to the service package, so the company now operates as a neo bank.
Revolut has had a (limited) banking license in the European Union since 2018 and offers banking services in its own right, ie not through partners, but the classic universal banking services are part of services will not be introduced for a long time: that is, they will not start collecting deposits and will not start lending, selling financial services, but providing payment services.
The notice states that “the acquired banking license will allow Revolut Bank to provide limited banking services through the Revolut application, along with other financial services and products offered by the Revolut Group.”
Last year, the situation changed on the credit front: Revolut launched its bank in Lithuania and then in Poland, and both states began offering credit products. In Lithuania, for example
- credit card loans were launched with a credit line double the customer’s monthly payment,
- or personal loans of between € 1,000 and € 15,000 with a maturity of up to 5 years have started to be disbursed.
This year, Revolut Bank launched a service called Revolut Bank in 10 more countries (Bulgaria, Croatia, Cyprus, Estonia, Greece, Latvia, Malta, Romania, Slovakia, Slovenia and the Czech Republic). this circle is now expanding with Hungary. As the CEO of our confirmed paper:
There are also countries in the countries that have joined so far that these types of loans are offered to the borrower
Revolut was loved by many for the ability to send instant, phone-billed money, a feature that preceded instant pay-per-view at home that was able to fill just that gap with a bank-independent, popular service. To this day, many people (also) require the fintech app, although today – of course with different pricing per package and a typical transaction fee – they could initiate an immediate transfer from any Hungarian account to another Hungarian service provider’s account.
In the basic package of Revolut, cash withdrawals are free of charge up to HUF 75,000 per month (above which the fee rate is 2%), which is not such a huge function, as cash withdrawals from Hungarian bank accounts are up to HUF 150,000 (in case of two different transactions per month). In the field of international transactions, Revolut also operates with a cheap value proposition and cheap currency exchange, so
overall, Revolut has already been able to capture important banking revenues from domestic banks in the area of payments.
Not to mention the amount of money that rests on Revolut balances instead of domestic bank accounts. Revolut has several types of PFM functions and money transfer and management functions:
- the app allows those interested to see exactly how much they are spending, for example, at a restaurant or shopping. They have set their monthly spending budgets for these categories,
- in the app, the fees for subscription services are managed in a single interface,
- they can set aside money little by little by rounding up card payment amounts,
Brokerage and cryptocurrency trading
A Revolut transaction level with free stock trading service also, which is considered a “low-cost” service because it has several limitations, but this is one of the reasons why the application is popular among users.
European consumers American shares can be traded free of charge, 3 per month, you can participate in a $ 1,000 transaction each (in the case of a basic, free account). In addition, one é0.01 also incurs a number of account management fees from users. The Premium and Metal packages already come with several free transactions, but these are services that are subject to a possible monthly subscription.
The company has some also offers indirect investment in cryptocurrencies, that is, it provides an investment vehicle with which the cryptocurrency has not become the property of the user, but exposure can be taken with it in the cryptocurrency. The cryptocurrency business soon became one of Revolut’s most revenue-generating businesses, In 2020, important revenues of £ 39 million were achieved in this segment.
Revolut recently announced that it will succeed in obtaining a broker license in the United States and that the service will also appear in the U.S. market. (Acquiring a broker license took 16 months and Revolut initially only had to act as an “intermediary broker” and had to rely on a New Jersey-based fintech, Drive Wealth, to account for commercial transactions.)
Unlike fintech in Europe, the US can control the payment for orderflow model already known at Robinhood, it is possible for market makers to pay brokers to forward bids. This practice is quite controversial and the stock market is currently investigating the regularity.
33 rate dollar start
Revolut since its inception raised nearly $ 1 billion in investment, value last It was estimated at 33 dollars. Not coincidentally, because the company hardly has gained more than 16 million customers worldwide in five years. One of Revolut’s undisguised goals is to become a so-called “superapplication” that offers multiple features through a single interface. This trend is gaining ground in Asia and has been promoted by companies such as Grab and GoTo in Southeast Asia, as well as Alibaba and Tencent in China.
So far, they are in a loss-making, growing phase
In 2019, Revolut recorded a loss of £ 106.7 million, The company closed 2020 with a loss of £ 167.8 million. During the seven-year history of the growth-focused company, it has not closed a single year with a profit. Revolut’s revenue in 2020 34 will definitely rise to £ 222 million, thanks in part to more cryptocurrencies launched. (The latter has brought the company £ 39 million in revenue, and it already accounts for almost 20 per cent of the company’s total revenue.)
We asked the company how much deposit and loan stock it currently has, but these questions were not answered. All we know, however, is that according to the 2020 report, the company’s deposit portfolio rose to £ 4.6 per cent from £ 2.4 per cent at the end of the previous year, following a 96% increase.
Revolut has been a serious competitor of the domestic traditional banking system and traditional brokerage service providers in some areas so far, and the move poses an even greater threat to them. Traditional operators have so far made huge investments in digital developments and are now expected to force even more areas into closer service and price competition with the fintech subversive. Their knowledge of the local market and their embeddedness is always much deeper than in a foreign service, so there will certainly be many areas where fintech will not be able to kick the ball into the ball soon. To name just a few examples, it is unlikely that Revolut will come up with mortgages, baby loans or state-subsidized loan schemes in the near future, or possibly sell life insurance in Hungary. From the usage point of view, of course, the competition that has become even sharper due to Revolut can usually be beneficial in terms of service quality and prices.
Digital competition from fintech subversives, bigtechs and banks will also be discussed at the Portfolio Banking Technology conference on October 13th. Register here!
Cover image source: Getty Image / SOPA images.