Revolut an English fintech company offering banking and investment services to consumers. Founded in 2015 by Nikolay Storonsky and Vlad Yatsenko, the company initially produced a low-rate travel card. Storonsky in particular was an avid traveler who became tired of spending hundreds of pounds on currency exchange and foreign transaction fees. The Revolut app and core banking account are free to use. Instead, money is made through a combination of subscription fees, transaction fees, perks, and ancillary services.
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Revolut Origin Story
Revolut is a British fintech company offering consumer banking and investment services.
The company was founded in 2015 by Nikolay Storonsky and Vlad Yatsenko after the former became tired of spending hundreds of pounds on currency exchange and foreign transaction fees while traveling.
With a background in finance, Storonsky knew that the rates he was receiving were not the best rates currency exchange platforms could offer consumers.
Unable to find a solution that minimized the cost of spending money overseas, Storonsky and Yatsenko set about developing one themselves.
Revolut’s first product was a travel card that enabled international travelers to change money into thirty different currencies at market rates.
The Revolut exchange platform was officially launched in July 2015 with a small round of investment funding worth $3.5 million.
Additional capital and expansion
In 2016, Revolut passed 100,000 users and secured Series A funding worth $15 million.
This was followed by a Series B round in 2017 ($66 million) and a Series C round for $250 million the following year.
At some point, Storonsky and Yatsenko pivoted somewhat and built a super app for younger consumers who preferred to access financial services on their smartphones.
Investment capital was used to expand Revolut’s product lineup with crypto trading, business accounts, and a donation service where users could support international charities.
At the end of 2018, the company received a banking license from the European Central Bank, which authorized it to offer consumer credit and accept deposits.
Six months later, Revolut launched commission-free stock trading on the New York Stock Exchange (NYSE) and NASDAQ.
In 2019, Revolut passed ten million users as it first expanded into Australia and then Singapore soon after.
The company also entered into a landmark partnership with VISA in September, enabling the bank to expand into 24 markets, including the United States.
Series D funding
In February 2020, Revolut announced a Series D funding round worth $500 million.
The round was led by Technology Crossover Ventures (TCV), who were also early backers of notable companies such as Netflix, Spotify, and Airbnb.
Five months later, TechCrunch reported that Revolut had secured a further $80 million from TSG Consumer Partners.
The company said that the massive injection of funds would be used to add new features and roll out banking operations across Europe.
Some money would also be directed toward a new subscription management tool where users could see their active subscriptions in one interface.
Launch in the United States
Revolut launched its long-awaited launch in the United States market in March 2020 as the coronavirus pandemic started to take hold worldwide.
The company then secured a broker-dealer license in September 2021, enabling it to offer a commission-free trading option.
Like competitor Robinhood, Revolut planned to earn revenue via payment for order flow (more below).
After a Series F funding round worth $800 million, Revolut was valued at $33 billion.
The company added extra functionality to enable users to book vacations from their app and withdraw earned pay ahead of time to manage their expenses.
Revolut’s Value Proposition:
- Low-Cost Banking: Revolut provides users with access to a free core banking account, helping them avoid traditional banking fees.
- Currency Exchange: The company offers competitive foreign exchange rates and allows users to hold and exchange multiple currencies within their accounts, saving on currency conversion fees while traveling.
- Subscription Plans: Revolut offers premium subscription plans (Plus, Premium, and Metal) that provide additional features, such as customizable cards, priority support, cashback, and more, catering to users’ specific needs.
- Cashback and Rewards: The Revolut Rewards program offers personalized cashback offers and discounts on various purchases, helping users save money on everyday expenses.
- Insurance: Revolut provides insurance options, including device insurance and travel medical insurance, offering peace of mind and coverage at affordable rates.
- Investment Services: Users can invest in stocks, commodities, and cryptocurrencies, starting with small amounts, making investing accessible to a broader audience.
- Personal Loans: Revolut offers personal loans with flexible terms, allowing users to borrow funds when needed, with the company earning interest and potential overdraft fees.
- Payment for Order Flow (PFOF): While users enjoy commission-free trades, Revolut collects payment for order flow (PFOF), which helps generate revenue from trading activities.
Customer Segments:
- Frequent Travelers: Travelers benefit from Revolut’s competitive foreign exchange rates, fee-free spending abroad, and travel insurance options.
- Budget-Conscious Consumers: Users looking to save on banking fees, currency conversion charges, and everyday expenses appreciate Revolut’s low-cost banking and cashback rewards.
- Investors: Individuals interested in investing in stocks, commodities, and cryptocurrencies, especially those looking to start with small amounts, find Revolut’s investment services appealing.
- Tech-Savvy Millennials: Younger consumers who prefer managing their finances through mobile apps and seek convenient, digital banking solutions are a significant user segment.
- Small Business Owners: Revolut offers business accounts and financial services, making it attractive to entrepreneurs and small business owners.
- Digital Banking Enthusiasts: Customers interested in exploring digital banking and fintech solutions are drawn to Revolut’s innovative offerings.
Distribution Strategy:
- Mobile App: The Revolut mobile app serves as the primary distribution channel, allowing users to open accounts, access various financial services, and manage their finances conveniently.
- Online Marketing: Revolut employs online marketing strategies to reach and acquire new customers through digital advertising, social media, and referral programs.
- Partnerships: The company collaborates with other businesses and platforms to expand its user base and offer additional services, such as its partnership with Visa.
- Word of Mouth: Positive user experiences and word-of-mouth recommendations contribute to customer acquisition and retention.
Marketing Strategy:
- Cost-Saving Messaging: Revolut emphasizes cost-saving features, such as fee-free spending abroad, competitive exchange rates, and cashback rewards, in its marketing campaigns.
- Digital Marketing: The company utilizes digital marketing channels to target tech-savvy and digitally engaged audiences, showcasing the convenience of its app-based banking services.
- Educational Content: Revolut provides educational content, blog articles, and guides to help users make informed financial decisions, build trust, and establish itself as a reliable financial partner.
- Referral Programs: Revolut encourages users to refer friends and family through referral programs, offering incentives to both referrers and referees.
- Partnership Announcements: Announcing strategic partnerships and collaborations, such as the Visa partnership, helps increase brand visibility and attract new users.
- User Engagement: The company engages with its users through social media platforms, responding to inquiries, sharing updates, and fostering a sense of community.
Revolut revenue generation
The Revolut app and core banking account are free to use.
Instead, money is made through subscription fees, transaction fees, perks, ancillary services, and payment for order flow.
Subscription plans
Firstly, there are three paid plans which give extra functionality to the core banking account:
- Plus (£2.99/month) – offering the free UK and Euro IBAN account with a customizable card.
- Premium (£6.99/month) – offering all Plus features in addition to exclusive card designs, 24/7 priority support, and access to so-called Junior features that help kids manage their money.
- Metal (£12.99/month) – offering all Premium features, cashback on card payments, and three free international payments per month. Premium users are also sent a 100% contactless debit card made from reinforced stainless steel.
Rewards
The Revolut Rewards scheme allows users to enjoy personalized cashback offers and discounts on eligible purchases.
Rewards bonuses are credited to user accounts and encompass purchases from entertainment, travel, restaurant, grocery, and retail businesses.
In all likelihood, Revolut receives a commission from each merchant and then gives its users a portion of the fee as a bonus.
Insurance
The company also has two insurance options:
- Device insurance – global coverage is offered for £1 per week and covers all accidental damage.
- Travel medical insurance – here, Revolut uses geolocation technology to only charge consumers for days they are overseas. Medical and dental coverage starts from as little as £1 per day.
Trading
The Revolut trading platform allows users to trade stocks, commodities, and cryptocurrencies such as Bitcoin, Ether, and Stellar.
Users can get started for as little as £1 by purchasing fractional shares.
Plus and Premium subscription members can access a certain amount of free monthly trades. Each additional trade is charged at a flat fee.
Loans
Users can also take out a personal loan for between £500 and £25,000 with a payback period of 1 to 5 years.
The company makes money by charging interest on the loan and, where applicable, overdraft fees for late payments.
Payment for order flow
Revolut also collects payment for order flow (PFOF) to earn money from commission-free trades.
Essentially, PFOF is the compensation a broker (Revolut) receives from a market maker for sending customer trade volume their way.
Key takeaways:
- Revolut is an English fintech company offering banking and investment services. It was created after co-founder Nikolay Storonsky became dismayed at exorbitant foreign exchange and transaction fees while traveling abroad.
- Revolut offers three paid plans which give extra functionality to their free bank account. The company also earns a commission through its cashback and rewards scheme.
- Revolut has also established itself as an insurance and personal loan provider. Additionally, users can invest in stocks, commodities, and cryptocurrencies in fractional amounts.
| Element | Description |
|---|---|
| Value Proposition | Revolut offers a compelling value proposition for its users, including: – Multi-Currency Accounts: Providing users with the ability to hold and transact in multiple currencies. – Currency Exchange: Offering competitive exchange rates with no hidden fees. – Global Spending: Enabling cost-effective international spending and transactions. – Financial Insights: Delivering detailed spending analytics and budgeting tools. – Cryptocurrency Support: Allowing users to buy, hold, and exchange cryptocurrencies. – Contactless Payments: Providing contactless payment options through physical and virtual cards. – Savings and Investments: Offering options for saving and investing money. – Premium Services: Including premium subscription plans with added features. – User-Friendly App: Providing a user-friendly mobile app for managing finances. |
| Core Products/Services | Revolut’s core products and services encompass: – Multi-Currency Accounts: Providing users with multi-currency accounts. – Revolut Card: Issuing physical and virtual debit cards for payments. – Currency Exchange: Offering foreign exchange services at interbank rates. – Cryptocurrency: Allowing users to buy, sell, and hold cryptocurrencies. – Savings Vaults: Enabling users to save money in dedicated vaults. – Investment Products: Offering investment options through the app. – Budgeting Tools: Providing spending insights and budgeting features. – Premium Plans: Offering premium subscription plans with enhanced features. – Business Accounts: Extending services to business customers. – Financial Services Marketplace: Featuring third-party financial products and services. |
| Customer Segments | Revolut serves a diverse range of customer segments, including: – Individuals: Attracting individual users for personal banking needs. – Travelers: Targeting frequent travelers in need of cost-effective currency exchange. – Expats: Serving expatriates who often deal with multiple currencies. – Freelancers and Small Businesses: Providing financial services to self-employed individuals and small businesses. – Crypto Enthusiasts: Engaging with users interested in cryptocurrency trading. – Investors: Appealing to investors seeking easy access to financial markets. – Premium Customers: Serving premium plan subscribers with enhanced services. – Businesses: Extending services to businesses for corporate banking. – Global Audience: Expanding services to users worldwide. – Teenagers and Families: Offering accounts for teenagers and family members. |
| Revenue Streams | Revolut generates revenue through various revenue streams: – Interchange Fees: Earnings from transaction fees charged to merchants. – Subscription Fees: Income from premium subscription plans (e.g., Revolut Premium, Metal). – Cryptocurrency Services: Revenue from cryptocurrency trading spreads and fees. – ATM Withdrawal Fees: Earnings from ATM withdrawal fees beyond monthly limits. – Business Account Fees: Income from business account services and fees. – Currency Exchange Markup: Revenue from currency exchange rate markups. – Investment Fees: Earnings from investment product fees. – Partner Commissions: Income from partnerships with third-party providers. – Premium Plan Upgrades: Revenue from premium plan upgrades. – Advertising and Promotions: Potential revenue from advertising partnerships. |
| Distribution Strategy | Revolut employs a strategic distribution strategy to reach users: – Mobile App: Offering a user-friendly mobile app for banking and financial management. – Online Sign-Up: Allowing users to sign up and access services online. – Physical Cards: Issuing physical debit cards for in-store payments. – Virtual Cards: Providing virtual cards for online and mobile payments. – Global Expansion: Expanding services to new countries and markets. – ATM Network: Enabling ATM access for cash withdrawals. – Partnerships: Collaborating with partners for expanded services. – Investment Products: Offering investment products through the app. – Customer Support: Providing assistance through the app and website. – Savings Vaults: Promoting savings and investment features. |
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