As the year draws to close, AltFi kicks off a new series taking a look at the firms that will enter the 2020s after a particularly strong past twelve months. First up, Revolut.
One thing was very obvious over the past twelve months. It was that 2019 was the year that fintech entered the mainstream. For example (*humblebrag upcoming warning*), AltFi saw an enormous uplift in readership both in the UK and Europe as well as around the world as many more people from consumers, investors and the broader financial industry decided that firms disrupting finance are really, really interesting.
In this series of articles, we take a look at those firms (all UK companies, sorry), that closed the year driving that change and with much to celebrate. Not just pushing fintech outside of its bubble.
It’s a hard list to compile, and not exhaustive, or particularly quantitative, with so many impressive company achievements missing. So, apologies to those we didn’t include. First up Revolut.
As one of the first banking challengers to arrive on the fintech scene in the UK back in 2015, Revolut is seemingly starting to mature albeit with some notable missteps this past year. Probably, its ascendancy is most greatly expressed in a huge uptick in its core financials at the start of the year.
Revenues more than quadrupled to £58.2m at Revolut in the year ending December 2018, amid losses more than doubling to £32.8m. While 2019’s numbers are far off being made public, it seems that its high growth strategy is translating to the bottom line. A key thing for any venture capital-reliant firm as we enter a mature stage of the business cycle.
To this end, according to recent media reports, the firm is looking to raise more than £1bn in 2020. This would be easily one of the biggest fundraises in the UK for a fintech firm and certain to raise eyebrows. To date, Revolut has raised approximately $340m in investments, from venture capital firms including Index Ventures, Ribbit Capital, Balderton Capital and DST Global.
Launched by former Credit Suisse and Deutsche Bank investment bankers, Nik Storonsky and Vlad Yatsenko, Revolut now has 7 million customers and managed to hit more an incredibly fast rate of account openings in 2019, culminating in 1 million new customers over the month of October, Revolut Director of Marketing Chad West told AltFi.
"For the last three to four months consecutively we have been hitting about a million accounts a month. That is a combination of paid and organic. Just across the 30 European markets we are in. We haven't launched in the US just yet. But we have about 130,000 on the waiting list. Australia is still in beta with about 40,000," West said in November.
He added that the digital bank is not "untouchable", despite the high growth.
Indeed, the firm had some tricky moments at the start of the year. Revolut had what it can only be described as quite possibly its worst week in its five years of existence back in February. First it was reported that Revolut had turned off a system to prevent money laundering - CEO Nikolay Storonsky denied in a blog post, but is nonetheless now being looked at by the regulator.
On the same day, Wired published a feature on Revolut’s supposedly 'toxic' workplace culture and high staff turnover. This was further light on Storonsky’s already-reported “getting s**t done” ethos. A sign illuminated on Revolut's offices with this exact slogan was apparently taken down at some point, according to Financial News.
The next day it was also revealed that the company’s CFO had also resigned, the implication being that this was connected to money laundering short fallings, however, Revolut also denied this. It also attracted social media ire for its use of St Valentine’s Day as a marketing tool.
Later in the year, Revolut amassed more customer complaints than any other major full-service digital bank operating in the UK between 2015 and 2018, according to a Freedom of Information request. The banking app received 171 claims from British customers that were taken up by the Financial Ombudsman Service over this period,
No doubt, some of these bumps in the road, alongside its stellar growth were reason enough for it to look to hire a string of senior executives as well as City grandee Sir Martin Gilbert as chairman of the board.
Senior hires included a TSB veteran as operations head, a former co-chief executive officer of Goldman Sachs International and Metro Bank’s finance director David MacLean. Philip Doyle also joined as director of financial crime risk Stefan Wille as deputy chief financial officer. Wille was the senior vice president of finance at German challenger bank N26.
As part of its ambitious global expansion strategy, which includes launching in 24 countries, the firm also made a number of senior hires to power its plans to take over the world. This included banking veteran Virgilijus Mirkės as CEO of Revolut Lithuania, where it holds a banking license.
Revolut, which prides itself on its high growth strategy certainly has sailed close to the wind on more than one occasion, if not right into a squall or two of its own making. But the firm is clearly executing where it matters. The bottom line. The next twelve months will be pivotal and there are now plenty of eyes watching.
Next up in the series is Monzo.