Revolut — the London-based, Russian-led $5.5bn fintech unicorn — seems to be having an id disaster.
Earlier this month the agency applied for a full UK banking license in order that it may well begin to supply overdrafts, loans and absolutely fledged present accounts to its three million-plus British clients. Over the previous yr or so Revolut has additionally employed a load of grandees from the world of conventional finance — reminiscent of Aberdeen Asset Administration founder Martin Gilbert, now Revolut’s chairman, and former Goldman Sachs vice-chairman Michael Sherwood — in an obvious bid to shake off its popularity for being unreliable and unprofessional, and to turn into a grown-up monetary establishment.
And but it usually appears to behave extra like an adolescent.
The factor is, Revolut does already supply numerous good and wise providers for serving to clients handle their cash, reminiscent of budgeting and analytics instruments, “financial savings vaults” with respectable rates of interest (or respectable sufficient, given the instances we reside in), and a “linked accounts” function that lets you see all of your varied financial institution balances in a single place.
However the issue is that none of these appear to make them very a lot cash. So additionally they supply a load of a lot much less wise options for serving to retail clients tackle dangers, reminiscent of cryptocurrency hypothesis, “commission-free” inventory buying and selling, and commodity buying and selling, underneath the class of “Wealth”.
The one two months that yet-to-make revenue Revolut has ever stated it has damaged even had been in late 2017 and in November 2020. Listed below are these two time intervals on a chart — guess what the chart is displaying?
If you happen to guessed one thing that rhymes with, er, match loin, you guessed appropriately.
Revolut declined to inform us which segments powered its profitability in these two specific time intervals, nor whether or not they had managed to remain within the black since November. However we do discover that their two months of profitability appear to coincide fairly neatly with the months by which the value of bitcoin abruptly surges. So we will see why the corporate is so eager to push that individual class of
playing buying and selling.
And so they do actually push it.
That is what this severe monetary establishment despatched through push-notification to clients on its app final week (you’ll be able to see the identical factor on its blog):
Sure, Revolut needs its clients to “have a good time” a milestone that actually doesn’t exist. We have said it before and we’ll say it once more: there isn’t a such factor as a “market cap” on the planet of crypto. Revolut then shares the “enjoyable truth” that “with Bitcoin main the cost, it makes up $762bn of the full market capitalisation – which is greater than Fb! ($754bn)”
Essentially the most enjoyable information are at all times those that aren’t true.
Revolut goes on to current “3 methods Revolut makes buying and selling crypto fast and straightforward”, which actually seems like a plea for his or her clients to get entangled out there. Right here’s quantity three (emphasis ours):
It took Bitcoin 11 years to get to $20,000, however solely about 3 weeks to double that to $40,000. In 2020 alone, the worth of bitcoin grew by over 400%. You will get in on the motion from simply $1 – beginning small is OK! Bear in mind, the worth of belongings is variable and might go down in addition to up.
It has additionally taken lower than three weeks for the value of bitcoin to crash by about 25 per cent — it was buying and selling across the $31,000 mark at pixel time, down from a excessive of simply over $41.500 on January 8. However surprisingly, Revolut hasn’t notified their clients of this.
Look, we perceive that Revolut is making an attempt to disrupt finance and to turn into “the world’s first truly global financial superapp”, so to moan that they don’t seem to be behaving like a boring outdated financial institution might sound just a little unreasonable.
Nevertheless it feels just a little discordant to us for Revolut to concurrently be making an attempt to be taken significantly as a spot that’s going to take care of your hard-earned cash, whereas additionally encouraging retail traders to get entangled in extremely frothy markets.
Of the primary challenger banks which have emerged prior to now few years within the UK, Starling Financial institution was the first to become profitable. It says its common stability in its shopper financial institution accounts is now £1,625 — that compares to a reported common stability of £250 for Revolut, and £359 for Monzo.
So why is Starling Financial institution doing so significantly better than its opponents? We expect the primary clue is within the title. The financial institution has been clear about what it’s providing from the beginning, and hasn’t tried to leap on any high-risk bandwagons, temptingly profitable as these could be. It could be much less thrilling than the opposite challenger banks, however its popularity is considered one of reliability and maturity.
To sum up: if Revolut actually needs to be taken significantly as a financial institution, it wants to start out behaving like one.
Nonetheless, even when it hasn’t achieved that but, at the least the corporate portrays a severe picture in its advertising (screenshot from Revolut’s web site, underneath the “influencers” tab):
The virus has crushed the challenger bank dream – FT Alphaville
Revolut’s growing pains rumble on – FT Alphaville
No, bitcoin is not the “ninth-most valuable asset in the world” – FT Alphaville
Inside Revolut’s bid to be a bank – Sifted
Monzo: the bank that doesn’t want to be – FT Alphaville