Banking has dramatically evolved over just the last few years. Fintech companies are launching new and improved digital banking services every week, and now customers can easily send and receive money, pay bills, and even deposit cheques, all through a non-traditional banking platform accessible directly through their phones.
The customer demand for digital banking is high: in recent years, digital banks worldwide have grown at three times the rate of traditional banks. This demand was accelerated even further by the COVID-19 pandemic, pushing 54% of banking customers to use digital options more frequently.
For the UK’s biggest digital bank, Revolut, things are moving forward even faster. Due to the pandemic, the company experienced slower growth than usual in 2020, but after adding a slate of new products and expanding into thirty-one new markets, the digital bank’s revenue increased by 130% in the first quarter of 2021.
The rapid growth and expansion of Revolut showcase Europe’s—and most of the world’s, for that matter—increasing reliance on digital banking options. Just five years ago, it would have been unfathomable to think a digital platform could rival the services offered by HSBC or Barclays. But halfway through 2021, Revolut is proving to be more than just a competitor.
“As the extraordinary circumstances of 2020 drove the trend towards digital financial management, we continued to innovate for customers to make their financial lives easier and accelerate daily use,” Revolut’s founder and CEO Nikolay Storonsky said in a statement.
Crypto and new markets = growth
Revolut, which is building “the world’s first truly global super-app” launched in the UK in 2015. The platform began by offering only money transfers and exchanges, now evolving to provide prepaid cards, savings accounts, access to cryptocurrency, foreign exchange, and more.
One of Revolut’s key differentiators—and a key propellor to the company’s 2020 growth—is that it provides easy access to cryptocurrency. The digital bank added 11 new crypto tokens this past year. Revolut users can trade Cardano, Uniswap, Synthetix, and more, as well as withdraw Bitcoin in a much more streamlined manner.
Expansion is also a key part of Revolut’s growth strategy. The company expanded into the United States and ten European markets earlier this year, making it now available in 31 countries and counting. 15 million users are now logging on to manage their banking through Revolut.
Revolut partnered with translation and localization startup Lokalise to support the rollout into so many new markets. “Localizing” an app involves making it available to citizens in their native language and norms, allowing for equitable access to banking technology to new demographics, and also facilitates a young company’s growth.
By working with Lokalise, Revolut improved its localization flexibility, which “made it possible to increase the speed of rollout to new markets,” according to Revolut’s operations manager Theo Williams.
This increased focus on localization has allowed Revolut to add five million new users in just one year—a staggering number that represents the fintech’s best year ever.
The expansion into the United States is also a huge move for the UK bank. Moving into North America is a huge opportunity for Revolut, and it hinges on the platform’s ability to become a “super-app”—codeword for a one-stop financial shop.
“In the U.S., fintechs just do one thing — and they do it well,” says Storonsky. “We offer all the tools you need in your financial life.”
So far, 150,000 U.S. users have joined Revolut, but the fintech’s target is one million users by the end of the year.
Scaling the platform
Between global expansion and the addition of countless new products and services, Revolut’s growth strategy is paying off. The company reported $361 million in revenue (£261 million) — a 57% increase from the year prior — including $54 million (£39 million) in fair value gains on cryptocurrency.
In 2020, Revolut raised major funding, too. The company secured a $580 million Series D funding round, which has backed the company’s huge plans to expand through the U.S. and into new European markets.
Beyond those new markets, Revolut has also expanded its service offerings. Late last year, Revolut launched its web app. After solely existing as an app, the new Revolut Web App gives users easy access to their banking services from desktop, offering a full view of transactions and bank balances, and providing an alternative to the smartphone app as needed.
Revolut also launched a Honey-like new feature called Revolut Shopper. The browser extension helps you find and automatically apply discount codes while shopping and receive cashback bonuses from select retailers. And its Smart Subscriptions feature lets users manage and track any subscriptions or automatic debits in one easy place. Revolut also debuted a paid, upgraded plan that promises to protect users from fraud and theft.
Digital banking is here to stay
Digital banks provide an easy-to-use alternative that is popular with younger demographics: 46% of Gen Z bankers are using a digital bank account. They allow for easy mobile payment options and provide a great option for sending and receiving money.
And on the business side of things, innovation opportunities are high and competition internationally is relatively low.
Though US-based banks are leading this growth, the UK is coming in a close second.
Today, over 14 million Brits use a digital-only bank, and it’s predicted that the number of UK digital bank users will rise 12.7% between 2020 and 2024.
“Revolut entered its next phase of growth in 2020 as we broadened our global footprint, strengthened our capital base, enhanced governance and bolstered executive management,” says Revolut’s chairman, Martin Gilbert. “These developments continue to provide a strong platform from which to launch new products to serve our rapidly growing customer base.”