There is something faintly imperial to Revolut’s relentless spread. Surely no other fintech in the world has launched quite so many products, acquired quite so many customers, nor taken on so many geographies in so short a time.
Rishi Stocker, head of partnerships at Revolut, is currently focused on coordinating the banking challenger’s entry into Japan. Speaking to AltFi, Stocker said that the Japanese market, unlike others in Asia, is a tough nut to crack.
He said that regulators are “very keen on local presence and very concerned about international companies entering and then suddenly changing their strategy and leaving”.
To allow Revolut to set up shop in Japan, regulators have insisted that the fintech firm appoint an experienced local Japanese expert as a director of the entity. “That’s quite an interesting nuance of Japan whereas a lot of other markets are a lot more open – so long as there’s a strong compliance team based in our head office in London,” explained Stocker.
Day-to-day, he is concerned with two crucial pieces of work; the first and arguably most important is to get the banking app regulated.
“When we go into a market like Japan, we look at how we get regulated in the fastest possible time, so that we’re not waiting for two years to launch a market,” he said. “A lot of that is actually meeting the regulator, showing them our product and how it benefits their consumers, and even where possible looking for ways we can get exempt from licensing, or get some sort of sandbox permission.”
Of additional importance is the need to identify local banks willing to work with the ever-punchy disruptor. Revolut is currently in the process of applying for a European banking licence. Until it has one, it remains reliant on established European banks to support its services.
But finding banking partners in Japan hasn’t been easy.
“Because we’ve grown to quite a large player in Europe, banks are almost slightly concerned about us, and it seems to take a lot longer to get onboarded,” explained Stocker. “They just have to Google Revolut and see that we’ve applied for a banking licence.”
He explained that Japan’s newer generation of online banks, such as Rakuten, are more willing to cooperate. He noted, however, the widespread belief that such banks may end up creating copycat fintech functions in the long-run.
Rakuten operates a fintech fund which has invested in such firms as BlueVine, an American business finance platform, and German consumer lender Kreditech. I asked Stocker whether such an investment might be insisted on as a prerequisite to partnership.
“Yes, that’s what you see a lot of here,” he said. “Companies don’t want to help you unless you let them invest in you.” He referenced the fact that Stripe and Square, two leading payments firms, took local investment en route to launching in Japan.
“I think that’s quite typical of these major Japanese corporations – they’re sitting on a lot of cash and they want to invest before they really give you their assistance.”
Another challenge is the target customer. Stocker sees the country as some way ahead of much of the world on hardware, but “super far behind” on software and fintech.
“If you look at the banks, their online banking experience is really poor and their fees are even higher than the banks we see in Europe or in Australia. I think there’s a lot of scope to disrupt,” he said.
And while other fintechs such as TransferWise and Payoneer are lurking around, Stocker sees no local fintechs attempting to offer a true banking alternative.
“If you look at people who offer a full alternative to a bank account, especially geared around international consumers looking also to get their credit, insurance and cryptocurrency needs from a single spot, there’s no one really doing it.”
Revolut expects all Asian markets, Australia and New Zealand to be up-and-running within the next six months. But the version of the app that will be delivered in Japan is being carefully tailored to suit the market.
The core proposition – a mobile wallet with zero-fees, overseas spending and sending – will remain unchanged. However, after seeing some 20 per cent of new customers in Europe sign up for its premium service, Revolut intends to plug the benefits of its paid-for version at an early-stage in Japan.
Additionally, cryptocurrency trading will be a key focus. Stocker called Japan “a major market” for crypto-trading, with activity concentrated amongst men between twenty and fifty.
“We’re making sure we get our crypto offering up and running as soon as possible,” he said. “And again, in Japan, a lot of the demand is actually not from the expert crypto-traders but from the casual traders that want to get into it in an easy, seamless way. So I think that Revolut can definitely add something there to the market.” He also called Japanese regulators “the most progressive when it comes to cryptocurrencies”, somewhat ironically given their otherwise conservative mindset.
Beyond North America, Asia, and Australia and New Zealand, the banking challenger is looking to South America and Africa, with launches slated for 2019.
“Africa’s interesting due to the lack of banking infrastructure. You had mobile phone operators almost come up with a first version of e-money via the M-Pesa network. So I think the concept of e-money as opposed to putting your money away in banks is pretty well known [in Africa],” said Stocker, while also highlighting ‘know your customer’ (KYC) issues and challenges relating to currency controls.
Unlike any other fintech, Revolut is going global – and going global fast. It already has more than 1.5 million customers to its name and has reportedly broken even, less than three years removed from launching. No market, it would seem, will go unchallenged.