– Revolut’s founder flatly rejects the marketplace banking model of Monzo and Starling, plans to build everything in-house
–Stock trading, savings accounts and a long-promised U.S. launch are “almost here”
– Storonsky claims Revolut’s “culture is changing” after criticism over its work-life balance
One of the great myths of financial technology is that challengers like TransferWise or Monzo have an advantage over traditional banks because they’re focused on doing one thing really well.
Nikolay Storonsky, founder of the $1.7 billion-valued challenger bank Revolut, clearly doesn’t buy into that.
“We're doing many things, and we’re doing them well,” he explains to me in a rather curt Russian accent.
“Many things” may be the understatement of the year. While the company started out with a prepaid currency card, today its feature-set is simply encyclopedic.
Current accounts, cashback, crypto-trading, travel insurance, phone insurance, Euro direct debits, standing orders, business accounts, airport lounge access, a concierge service, high street discounts … the list goes on.
Today Storonsky says stock trading and savings accounts are also both “in the plans.”
“The reality is what we're trying to achieve is [to] build a 10x better financial services company that is 10x cheaper as well,” he explains, leading me around Revolut’s new headquarters in London’s financial district of Canary Wharf.
MORE FOR YOU
“The only way to do it is not building only one product, but building a platform with a lot of products on top of it.”
This platform is part of Storonsky’s five-year goal of building “one of the biggest financial services companies in the world.”
And he’s making solid progress. In the last year the former Lehman Brothers trader has already seen Revolut’s valuation grow from $350 million to a whopping $1.7 billion.
Revolut’s platform
In conversation Storonsky frequently compares Revolut to Amazon—a company that started off selling only books, but today flogs just about everything, including access to its own servers.
But another apt comparison might be to a traditional bank, like HSBC or RBS, offering a suite of financial products which they then cross-sell to their customers.
To many in the world of fintech, this sounds like the antithesis of how the future of finance was supposed to pan out.
Across Europe buzzwords like “open banking” or “marketplace banking” promise a future where our financial lives are spread across dozens of companies, big and small, offering mortgages, insurance and investments that are cheaper and smarter because of open financial data.
“We have a different school of thought I would say,” says Storonsky, rejecting the model championed by his rivals Monzo and Starling.
“In [this] industry, if you're trading shares why would you want two or three providers? Insurance is the same, it's a commodity, it makes sense to be not like a marketplace, but just providing the best product in every category.”
He points to and criticizes existing marketplaces on comparison sites like Moneysupermarket: “It's not convenient to offer tens of products and let people choose. … I just want to click a button and know that the product I’m using is the best.”
Revolut’s strategy of building the best products in-house is certainly going against the grain, but it also seems to be working.
Profit motive
Naming Monzo and Starling as Storonsky’s rivals is slightly disingenuous.
Today Revolut’s extensive feature-set and Europe-wide reach across 31 states puts the company in a category of its own.
On the one hand it’s less of a bank than these digital challengers—Revolut doesn’t yet support U.K. direct debits, overdrafts or the ability to “switch”—but on the other hand it’s clearly more than just a bank, offering services like crypto trading that traditional banks might eschew.
When I ask him what exactly Revolut is, Storonsky seems reluctant to even pin his startup down, referring to it only broadly as a “financial services” company.
The other difference between Storonsky and his peers is simply the speed at which his company is growing and monetizing.
Rather than offering features for free, Revolut has a £6.99 ($9.19) per month premium tier, bundling in higher travel money allowances and perks like travel insurance.
It recently unveiled a superpremium tier called Metal, which comes in at £12.99 ($16.69) a month.
The freemium strategy seems to be paying off. In December 2017, with 1.5 million users, Revolut announced it had broken even, and since then its user base has climbed even further to 2.5 million.
(Exact figures for this profitability were not disclosed, and it remains unclear whether it is operating profit or net profit.)
Next Storonsky believes Revolut can harness its in-house financial products to make even more money from its user base, much like a traditional bank would.
“The real power in what we will do is the successful cross-selling, because we look at your transactions, where you go, how you spend, then in a smart way offer certain products for certain needs,” he explains.
Global domination
Generating more revenue from Revolut’s existing users is only half the battle. The other is aggressively growing the sheer number of users through global expansion.
“We [have been] working on the U.S. for almost a year, and it keeps being delayed, unfortunately,” says Storonsky. “Almost every month we're hoping it’s going to launch, but it’s delayed because of technical things.”
The delays are plainly frustrating to Storonsky, but he is confident that an eventual U.S. launch “will be great,” quoting the over 60,000 people already on Revolut’s waiting list.
Outside the U.S. Revolut has started processing transactions in Australia and New Zealand, despite not having “officially” launched there yet, and in Hong Kong it has just onboarded its first test customers.
The founder also says fast expansion brings benefits to the whole business.
“I'll give you an example: free money transfers. If we expand to the U.S. then people can have a Revolut account and money transfers can be free and instant between these countries. It's the same in Australia and New Zealand.”
Culture shock
Expansion and growth have also come at a cost.
In Storonsky’s attempt to mirror Amazon, Revolut has raced to become a global financial powerhouse but, in doing so, has also adopted some of the retail giant’s worst traits.
Amazon long faced criticism for its treatment of warehouse workers, and a 2015 New York Times article put the company’s high-pressure culture and treatment of white-collar workers in the spotlight too.
In response to the criticism CEO Jeff Bezos at the time said, “I don’t recognize this Amazon and I very much hope you don’t, either.”
Earlier this year talking about Revolut’s own workplace culture Storonsky told the Financial Times: “I can’t see how work-life balance will help you to build a startup.”
The company’s anonymous Glassdoor job reviews at the time seemed to echo his sentiment. One read: “Worst company culture. No recognition. Bullying from top management and employees that care more about stepping on you to advance rather than helping.”
Six months on, it’s fair to say something has changed.
Revolut’s Glassdoor reviews have improved and the entrepreneur laughs when I ask him about the company culture.
“That's the favorite question by journalists,” he smiles, before returning to business.
“The reality is that we do work hard, but not because someone is pushing, but because there is a huge opportunity and we don't want to miss it. But culture is changing as we grow as well."
Walking around Revolut’s new office it’s clear to see the company will never be a beanbag-toting, ping-pong-playing fintech like its peers.
That should hardly come as a surprise. Storonsky is headstrong on his mission to become the Jeff Bezos of banking, warts and all.
)
