Revolut
Revolut is a global neobank and financial technology company with headquarters in London, UK that offers banking services for retail customers and businesses.[3] It was founded in 2015 by Nikolay Storonsky and Vlad Yatsenko. It offers products including banking services, currency exchange, debit and credit cards, virtual cards, Apple Pay, interest-bearing "vaults", personal loans and BNPL (where it has a banking licence), stock trading, crypto, commodities, human resources and other services.[3]
The European Central Bank granted the company a full banking licence in December 2021, and Revolut, with its banking services, is available in 30 countries.[4][5]
In November 2020 Revolut was breaking even and, with a £4.2 billion valuation, became the UK's most valuable fintech company.[6] A US$800 million funding round in July 2021 brought the company's valuation to US$33 billion, making it the most valuable UK tech startup at the time.[7][8][9] In 2022, customer deposits at Revolut reached £12.6 billion ($15.5 billion).[10]
As of December 2023, Revolut more than doubled its headcount, employing over 7,500 people in more than 25 countries.[11]
Revolut Bank UAB, the firm's European Economic Area subsidiary, is licensed and regulated by the Bank of Lithuania within the European Union, and depositors' money is protected through deposit insurance, insured by the Lithuanian State Company Deposit and Investment Insurance.[12]
History[edit]
2015-2017[edit]
Revolut was founded on 1 July 2015 by Nikolay Storonsky and Vlad Yatsenko as a solution to traditionally expensive overseas spending partly caused by hidden charges and fees.[13][14][15] The Revolut platform was created to allow travellers to spend in over 90 countries.[16][14] It provided accounts and debit cards that could be used abroad with no foreign transaction fees and a “real” exchange rate with no further fees, as opposed to other currency transfer systems that adjust exchange rates.[17] The company was originally based in Level39, a financial technology incubator in Canary Wharf, London.[18]
By 2016, Revolut had around 300,000 users who had transacted almost £1 billion.[19] In 2017, the company released its Revolut for Business app.[20] After creating an account, users could hold, exchange or transfer money from 25 currencies. Business users also had access to real-time spending notifications and data analysis alerts.[20]
2018-2021[edit]
In December 2018, Revolut secured a specialised bank licence from the European Central Bank, facilitated by the Bank of Lithuania, authorising it to accept deposits and offer consumer credits, but not to provide investment services. At the same time, an Electronic Money Institution licence was also issued by the Bank of Lithuania.[21][22]
In June 2019, Revolut expanded to Australia, the company’s first expansion outside of Europe.[23]
In July 2019, Revolut launched commission-free stock trading on the New York Stock Exchange and Nasdaq, initially for customers in its Metal plan.[24] This was subsequently made available to all users.[25]
In 2019, Revolut announced deals with Visa and Mastercard.[26][27] Through its Mastercard partnership, the company expanded into the U.S., and the deal with Visa saw Revolut expand into 24 new markets and hire an additional 3,500 people.[26][27] In October, Singapore became the company’s first Asian market.[28]
In March 2020, Revolut was launched in the United States.[29] In August, the company launched its financial app in Japan.[30]
In November 2020, Revolut became profitable.[31]
In January 2021, the company announced that it had applied for a UK banking licence.[32][33] In March 2021, Revolut applied for a bank charter in the US via applications with the FDIC and the California Department of Financial Protection.[34]
Since 2022[edit]
In January 2022, Revolut launched as a bank (instead of an e-money institution) in 10 additional European countries: Belgium, Denmark, Finland, Germany, Iceland, Liechtenstein, Luxembourg, Netherlands, Spain, and Sweden.[35]
In September 2022, Revolut was targeted by a cyberattack. An unauthorised third party obtained access to a small percentage (0.16%) of customer details for a short period. No funds were accessed or stolen.[36][37] In the same month, The UK's Financial Conduct Authority added Revolut to its list of companies authorized to offer cryptocurrency products and services.[38][39] The FCA is the anti-money laundering supervisor for UK crypto groups and it granted Revolut an extension to its temporary cryptocurrency licensing programme before finalising the company’s status in September 2022.[39]
As of 2022, Revolut had 26.2 million customers and was making 341 million transactions a month.[40] In 2022, customer deposits at Revolut reached £12.6 billion ($15.5 billion).[40] This was an increase of 71% from the previous year when Revolut reported deposits of £7.4 billion.[40]
Ultra was launched in 2023 and is Revolut’s top-tier membership for users in the UK and EEA.[41] The plan includes Revolut’s best rates and lowest fees across savings, FX, stocks, unlimited airport lounge access, cancellation for any reason insurance as well as subscriptions to Financial Times, ClassPass, Wework, NordVPN and more.[41]
In January 2023, Revolut announced it would transfer its 2 million Irish customers to a new Irish branch and move these customers from Lithuanian IBANs to Irish IBANs, in a bid to compete with the remaining incumbent banks following the exit of RBS and KBC Bank from Ireland.[42] In 2023 Revolut also launched IBANs in France, Netherlands and Spain.[43]
Revolut accounts began allowing staking for holders of proof-of-stake cryptocurrencies in the UK and European Economic Area in 2023.[39] The ability to delegate stake and earn rewards for helping to maintain a blockchain is part of proof-of-stake blockchains Cardano (ADA), Ether (ETH), Polkadot (DOT), and Tezos (XTZ).[44]
In May 2023 it was reported that the UK's Prudential Regulation Authority was poised to reject Revolut's application for a banking licence in the UK.[45]
In July 2023, the Financial Times reported that Revolut had lost $20 million to organized criminal groups due to a flaw in its US payment system between late 2021 and early 2022.[46] The issue affected the company’s corporate funds and not customer accounts; some of the money was recouped.[46]
In August 2023, Revolut announced that they would stop offering cryptocurrency trading services to their US customers due to the 'evolving regulatory environment' as the Securities and Exchange Commission intensified regulations regarding certain crypto assets and platforms.[47] Other banking firms made the same decision in response to the SEC’s actions.[48]
In October 2023 Revolut said that it had 35 million customers[49]
in 37 countries.[50]
Funding[edit]
The company raised £6.5 million ($8.5 million) in a Series A funding round in 2016. An additional £17 million was raised on an equity crowdfunding site.[51] A year later, $66 million was raised in a Series B funding round. Index Ventures, Balderton Capital, and Ribbit Capital all participated.[52]
On 26 April 2018, Revolut raised $250 million in Series C funding.[53] It had a post-funding valuation of US$1.7 billion, making it a unicorn.[53] In February 2020, Revolut completed a Series D funding round of $580 million that more than trebled its value, valuing the company at £4.2 billion and becoming the United Kingdom's most valuable financial technology startup.[54][55]
In July 2021, Revolut's Series E raised US$800 million from investors, including SoftBank Group and Tiger Global Management, at a US$33 billion valuation.[56][9] This made Revolut the leading European start up in terms of valuation.[57]
As of June 2023, Revolut has raised $1.7 billion in total funding.[56]
Services[edit]
Personal and business banking[edit]
Revolut offers banking services including GBP and EUR bank accounts, debit cards, credit cards, currency exchange, stock trading, cryptocurrency exchange and peer-to-peer payments.[58] Revolut's mobile app supports spending and ATM withdrawals in 120 currencies and transfers in 36 currencies directly from the app.[59]
Criticism[edit]
Employment practices[edit]
In March 2019, Wired published an exposé of the company's employment practices and work culture. This found evidence of unpaid work, high staff turnover and employees feeling the need to work weekends in order to meet performance indicators.[78] A later article in December 2019 by Sifted noted that Revolut had a higher rating than its peers on Glassdoor.[79]
In June 2020, Wired published a further exposé of Revolut's dismissal of employees during the COVID-19 pandemic, in which employees, particularly in Kraków, were given the choice of being terminated for underperformance or a mutual agreement to leave the company voluntarily.[80] The company also presented a voluntary salary sacrifice scheme in which employees could exchange part of their wages for twice their value in Revolut share options.[80]
Automated suspension of accounts (2020)[edit]
Revolut, in common with traditional financial institutions, uses algorithms to identify money laundering, fraud and other criminal activity. Under certain anti-money laundering legislation, if suspicious activities are being investigated, bank staff are not allowed to tell customers why their accounts have been frozen.[81]
It has been reported since 2020 that Revolut's algorithms suspended accounts for weeks or months at a time after unusual activity was detected.[82][83] Revolut's policies require customers whose accounts were suspended to request a resolution via in-app chat support.[84][83][82] Revolut said that "the system is programmed to temporarily lock an account and place it in a queue, until one of our compliance agents can review the case".[85]
In February 2020, The Daily Telegraph reported that Revolut suspended an account containing £90,000 for more than two months[86] and that another customer travelled 500 miles from Auvergne in France to Revolut's London offices in an unsuccessful attempt to recover £15,000 in an account that Revolut had frozen without no justification given.[87] The account was later closed and the money in it returned to the customer's other bank accounts.[87]
Also in February 2020, The Times reported that Revolut suspended and subsequently closed a business account containing €300,000 belonging to Priorité Energie, an energy transition start-up company, preventing the company from paying its staff.[88] Revolut publicly apologised and eventually rectified the problem.[88]
