Revolut Ltd.
TypePrivate
IndustryFinancial technology
Founded1 July 2015 (2015-07-01)
Founder
HeadquartersLondon, England, UK
Key people
Nikolay Storonsky (CEO), Vlad Yatsenko (CTO)
Productscurrent accounts, debit cards, stock trading, currency exchange, foreign exchange, insurance
ServicesPeer-to-peer payments, currency exchange
RevenueIncrease €375 million (2022)[1]
Increase €26 million (2022)[1]
Number of employees
6,000[2] (2023)
Websiterevolut.com

Revolut is a global neobank and financial technology company that offers banking services. Headquartered in London, it was founded in 2015 by Nikolay Storonsky and Vlad Yatsenko. It offers accounts featuring currency exchange, debit cards, virtual cards, Apple Pay, interest-bearing "vaults", stock trading, crypto, commodities, and other services.

In 2020 Revolut expanded into Japan and the US and expanded its staff from 1,500 to 6,000. In November 2020 it was breaking even and, with a £4.2 billion valuation, became the UK's most valuable fintech company. In January 2021 Revolut applied for a UK banking licence, but as of December 2023 the outcome was still awaited, with regulators considering several reputational issues.[3][4] 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,[5][6][7] but the value was estimated at $18 billion in December 2023.[4]

Since Revolut does not have UK bank status, it does not reimburse victims of authorized push payment fraud in that country,[3] and the £85,000 protection of funds deposited in a bank by the Financial Services Compensation Scheme is not available for e-money. Revolut Bank UAB, the firm's European Economic Area subsidiary, is licensed and regulated by the Bank of Lithuania within the European Union.

History

Revolut was founded on 1 July 2015[8] by Nikolay Storonsky from Russia and Vlad Yatsenko from Ukraine.[8] The company was originally based in Level39, a financial technology incubator in Canary Wharf, London.[9]

It began offering cryptocurrency services in 2017, beginning with crypto trading.[10]

On 26 April 2018, Revolut raised $250 million in Series C funding. It had a post-funding valuation of US$1.7 billion, making it a unicorn.[11] DST Global was founded by Yuri Milner, who has been backed by the Kremlin in his previous investments.[12]

In December 2018, Revolut secured a challenger 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.[13][14]

In March 2019 Revolut united with Dax, the same year the company's chief financial officer Peter O'Higgins resigned. TechCrunch reported that he had quit following allegations of compliance lapses,[15] however O'Higgins denied that he had left for those reasons.[16]

In July 2019, Revolut launched commission-free stock trading on the New York Stock Exchange and Nasdaq, initially for customers in its Metal plan.[17] This was subsequently made available to all users.[18]

In August 2019, the company announced several hires with experience in traditional banking, including Wolfgang Bardorf, formerly executive director at Goldman Sachs and the global head of liquidity models and methodologies at Deutsche Bank, Philip Doyle, previously head of financial crime at ClearBank and fraud prevention manager at Visa, and Stefan Wille, previously senior vice-president of finance at N26 and corporate finance manager at Credit Suisse.[19]

In October 2019, the company announced a global deal with Visa, following which it expanded into 24 new markets and hired 3,500 additional staff.[20]

In February 2020, Revolut completed a funding round that more than trebled its value, valuing the company at £4.2 billion and becoming the United Kingdom's most valuable financial technology startup.[21]

In March 2020, Revolut was launched in the United States.[22] In August, the company launched its financial app in Japan.[23]

In November 2020, Revolut became profitable.[24]

In January 2021, the company announced that it had applied for a UK banking licence.[25][26] In March 2021, Revolut applied for a bank charter in the US via applications with the FDIC and the California Department of Financial Protection.[27]

In July 2021, Revolut raised US$800 million from investors, including SoftBank Group and Tiger Global Management, at a US$33 billion valuation.[7]

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.[28]

In March 2022, after Russia invaded Ukraine, Storonsky publicly opposed the war in Ukraine and Revolut donated £1.5 million to the Red Cross Ukraine appeal.[29][30] In March 2022, Revolut had 18 million customers around the world and was making 150 million transactions a month.[31]

In September 2022, Revolut confirmed a cyberattack exposed personal data of 50,000 of its 20 million customers.[32] In the same month, The UK's Financial Conduct Authority added Revolut to its list of companies authorized to offer cryptocurrency products and services; it had offered crypto trading since 2017 but had not been regulated.[10]

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.[33]

Revolut accounts began allowing staking for holders of proof-of-stake cryptocurrencies in the UK and European Economic Area in 2023.[10] 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).[34]

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.[35]

In October 2023 Revolut said that it had 35 million customers[36] in 37 countries.[37]

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.[38]

In August 2023, Revolut announced that they would stop offering cryptocurrency trading services to their US customers due to the 'evolving regulatory environment' there.[39]

Services

Revolut offers banking services including GBP and EUR bank accounts, debit cards, currency exchange, stock trading, cryptocurrency exchange and peer-to-peer payments.[40] Revolut's mobile app supports spending and ATM withdrawals in 120 currencies and transfers in 29 currencies directly from the app. Payments at weekends incur an extra fee of 0.5% to 2%, protecting Revolut against exchange rate fluctuations.[41]

It also provides customers access to cryptocurrencies such as Bitcoin, Ethereum, Litecoin, Bitcoin Cash, Cardano and XRP by exchanging with 25 fiat currencies.[42] A fee of 1.49% for buying or selling applies. Crypto cannot be deposited or spent, only converted back to fiat inside Revolut. Additionally, Revolut banks with Metropolitan Commercial Bank[43] of New York, which does not allow the transfer of fiat money to or from cryptocurrency exchanges.

Protection of funds

As of December 2023 Revolut is not a bank in the UK, so is not covered by the Financial Services Compensation Scheme. Protection for e-money with Revolut in the UK is provided by a "safeguarding account", which does not specify a timescale for repayment of funds. Revolut says that, as an e-money institution cannot lend the money it has received from one person to another, it should always have enough money in its safeguarding accounts to cover its debts to its customers; only if the institution has breached its obligations might there not be enough money in these accounts for customers to be repaid their funds. The safeguarding rules do not apply to cryptocurrency, commodities or stocks purchased through the Revolut app. However, Revolut says that money in a Savings Vault is deposited with a third-party bank and is FSCS protected.[44]

Controversies

Over the years, Revolut has faced a number of controversies, including delayed filing of accounts, EU regulatory breaches and fines, an aggressive work environment that has reportedly led to some key employees parting ways with the company, and Storonsky’s Russian ties.[45]

Automated suspension of accounts

Revolut, in common with traditional financial institutions, uses algorithms to identify money laundering, fraud and other criminal activity, but unlike the rest of the banking industry, Revolut's algorithms additionally trigger an automated suspension of accounts. Revolut explains 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".[46]

It was reported in 2020 that Revolut's algorithms suspended accounts in error for weeks or months at a time because Revolut did not have sufficient compliance agents to review the automated suspensions sooner. While Revolut paid no interest on the large suspended balances, it could earn interest on the funds in wholesale money markets. Customers whose accounts were suspended were blocked from contacting Revolut's usual chat support channel and instead received automated responses from a chatbot.[47][48][49] The Daily Telegraph reported that Revolut suspended an account containing £90,000 for more than two months[50] 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 similarly frozen without any justification being given.[51] In a further case reported by The Times, Revolut suspended and subsequently closed a business account containing €300,000 belonging to Priorité Energie, which "helps low-income families in Paris to insulate their homes under a government initiative", preventing the company from paying its staff.[52]

According to Finews.com, Revolut's public Internet forums in 2020 almost 500 complaints by customers about locked accounts and a lack of response from Revolut's support team.[53]

Employment practices

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 being ordered to work weekends to meet performance indicators.[54] A later article in December 2019 by Sifted noted that Revolut had a higher rating than its peers on Glassdoor.[55]

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, in order to reduce the headline number of 62 redundancies announced by Revolut. The report said "Current and former Revolut employees say staff were coerced into accepting terminations, even though the company had no legal grounds to fire them" and that employees in Porto were pressured into agreeing to a salary sacrifice scheme in order to keep their jobs.[56] According to Wired, in a message sent to the 495-strong customer support team on Slack shortly after the salary sacrifice scheme was announced, head of support Inna Grynova urged them to participate:

So far, almost 20 per cent of our employees globally have submitted their sacrifices. In Support we've gathered only 44 submitions [sic] (out of 495 employees) which is a very small number. Our goal is to use SSS as an alternative to the need of employees redundancy and other cost cuts. So the success of SSS depends on all of us. If it won't be enough, unfortunately we would need to go for the other steps, which we'll try to avoid. The positive impact of SSS can be achieved only when we work together.

Non-reimbursement of fraud victims

As of December 2022 Revolut, as an e-money company offering digital banking services rather than a UK bank, is not signed up to the voluntary Contingent Reimbursement Model Scheme (CRM) and, unlike banks, refused to reimburse victims of authorized push payment fraud.[3]

See also

References

  1. 1 2 "Financial Statements" (PDF). Revolut Bank UAB. 31 December 2022.
  2. ↑ "Fintech firm Revolut assembles behavioural team after criticism of its corporate culture". theguardian. Archived from the original on 1 February 2023. Retrieved 6 January 2023.
  3. 1 2 3 Vahl, Shari; Espiner, Tom (5 December 2022). "'I had £8,000 stolen but Revolut won't refund it'". BBC News.
  4. 1 2 Makortoff, Kalyeena (22 December 2023). "Fintech firm Revolut hit by £25m loss after rise in staff wages". The Guardian.
  5. ↑ Megaw, Nicholas (15 Jul 2021). "Revolut valued at $33bn after $800m fundraising". Financial Times. Archived from the original on 18 July 2021. Retrieved 15 Jul 2021.
  6. ↑ "Revolut becomes most valuable UK start-up after £24bn valuation". BBC News. 2021-07-15. Archived from the original on 2021-07-22. Retrieved 2021-07-16.
  7. 1 2 Metcalf, Tom; Spezzati, Stefania (15 July 2021). "Revolut Draws SoftBank Investment to Hit $33 Billion Value". Bloomberg News. Archived from the original on 26 July 2021. Retrieved 7 August 2021.
  8. 1 2 "Vlad Yatsenko, a Ukrainian who co-founded Revolut, becomes a billionaire after an $800M round and a $33B valuation". AIN.UA. 2021-07-16. Archived from the original on 2021-07-27. Retrieved 2021-07-27.
  9. ↑ Dan, Enriques (29 April 2018). "Are You Ready To Give Fintech A Try?". Forbes. Archived from the original on 12 June 2018. Retrieved 12 June 2018.
  10. 1 2 3 "Revolut receives green light to run UK cryptocurrency business". Financial Times. 2022-09-27. Retrieved 2023-02-21.
  11. ↑ Munford, Monty (26 April 2018). "Revolut launches current accounts and a chatbot". Forbes. Archived from the original on 26 April 2018. Retrieved 26 April 2018.
  12. ↑ Drucker, Jesse (5 November 2017). "Kremlin Cash Behind Billionaire's Twitter and Facebook Investments". The New York Times. ISSN 0362-4331. Archived from the original on 5 November 2017. Retrieved 31 January 2019.
  13. ↑ "Revolut granted specialised bank and electronic money institution licences". Bank of Lithuania. 13 December 2018. Archived from the original on 22 April 2019. Retrieved 13 December 2018.
  14. ↑ Megaw, Nicholas (13 December 2018). "Lithuania licence lets Revolut launch banking products". Financial Times. Archived from the original on 13 December 2018. Retrieved 13 December 2018.
  15. ↑ Russell, Joe. "Revolut CFO resigns following money laundering controversy". TechCrunch. Archived from the original on 1 March 2019. Retrieved 1 March 2019.
  16. ↑ "Let me set the record straight". Revolut Blog. 1 March 2019. Archived from the original on 10 March 2021. Retrieved 14 October 2019.
  17. ↑ "Revolut launches commission-free share trading". Financial Times. August 2019. Archived from the original on 4 August 2019. Retrieved 9 August 2019.
  18. ↑ "Should you trade stocks for free with Revolut?". Which? News. 24 September 2019. Archived from the original on 14 October 2019. Retrieved 14 October 2019.
  19. ↑ "Revolut bolsters senior team with banking executives". Financial Times. 23 August 2019. Archived from the original on 25 May 2021. Retrieved 16 November 2019.
  20. ↑ Short, Eva (30 September 2019). "New deal with Visa will see Revolut hire thousands, expand into 24 markets". Silicon Republic. Archived from the original on 10 March 2021. Retrieved 7 October 2019.
  21. ↑ Makortoff, Kalyeena (25 February 2020). "Digital bank Revolut becomes UK's most valuable fintech startup". The Guardian. ISSN 0261-3077. Archived from the original on 7 June 2021. Retrieved 25 February 2020.
  22. ↑ West, Chad (24 March 2020). "Revolut launches in the United States". Revolut Blog. Archived from the original on 16 January 2022. Retrieved 25 February 2022.
  23. ↑ "Revolut launches its financial app in Japan". TechCrunch. 7 September 2020. Archived from the original on 2021-07-15. Retrieved 2020-09-08.
  24. ↑ Browne, Ryan (2020-12-08). "Revolut, Europe's $5.5 billion digital bank, quietly broke even in November". CNBC. Archived from the original on 2021-05-23. Retrieved 2020-12-11.
  25. ↑ "Revolut Applies for U.K. Banking License". Bloomberg. January 11, 2021. Archived from the original on 2021-02-06. Retrieved 2021-01-13 – via www.bloomberg.com.
  26. ↑ "Challenger bank Revolut bids to take on high street". www.standard.co.uk. January 11, 2021. Archived from the original on February 18, 2021. Retrieved January 13, 2021.
  27. ↑ "Revolut applies for bank charter in the US". TechCrunch. March 22, 2021. Archived from the original on August 4, 2021. Retrieved April 14, 2021.
  28. ↑ "Revolut launches as a bank in 10 Western European countries". Finextra Research. 2022-01-11. Archived from the original on 2022-01-13. Retrieved 2022-01-16.
  29. ↑ Hyatt, John. "Russian-Born Billionaire Behind Revolut Fintech App Publishes Anti-War Letter". Forbes. Archived from the original on 2022-03-06. Retrieved 2022-03-07.
  30. ↑ "Revolut raises €10 million for Red Cross Ukraine appeal". Finextra Research. 2022-03-11. Archived from the original on 2022-06-08. Retrieved 2022-05-12.
  31. ↑ "Revolut strengthens US growth and marketing with two new leadership hires". Revolut. 2022-03-25. Archived from the original on 2022-06-08. Retrieved 2022-04-18.
  32. ↑ "Revolut hack exposes data of 50,000 users, fuels new phishing wave". Archived from the original on 2022-09-22. Retrieved 2022-09-22.
  33. ↑ Weston, Charlie (23 January 2023). "Revolut granted Irish IBANs, piling pressure on mainstream banks". Irish Independent. Retrieved 2023-01-23.
  34. ↑ Howcroft, Elizabeth (2023-02-07). "Revolut to offer returns on crypto holdings via 'staking'". Reuters. Retrieved 2023-02-21.
  35. ↑ Morris, Stephen (19 May 2023). "Revolut in shareholder battle with SoftBank as UK licence talks stall". Financial Times. Retrieved 9 June 2023.
  36. ↑ "Revolut launches Revolut 10 as it targets primary accounts and passes 35m customers worldwide". Revolut. 2023-10-12. Retrieved 2023-10-23.
  37. ↑ "Revolut turns on its app in New Zealand, targets big four customers". Australian Financial Review. 2023-07-03. Retrieved 2023-07-08.
  38. ↑ Venkataramakrishnan, Siddharth; Quinio, Akila (2023-07-09). "Revolut's US payment flaws allowed thieves to steal $20mn". Financial Times.
  39. ↑ "Revolut Pulls the Plug on Crypto in US, Citing Regulatory Environment". 4 August 2023.
  40. ↑ Dillet, Romain (20 July 2015). "Revolut Raises $2.3 Million For Its Mobile Foreign Exchange Service". TechCrunch. Archived from the original on 14 January 2016. Retrieved 11 January 2016.
  41. ↑ "What foreign exchange rate will I get? | Revolut Help Centre". www.revolut.com. Archived from the original on 2020-08-14. Retrieved 2020-04-21.
  42. ↑ "Revolut adds XRP and Bitcoin Cash support". TechCrunch. 2018-05-24. Archived from the original on 2021-04-16. Retrieved 2021-04-14.
  43. ↑ Peters, Jay (2020-03-24). "Popular European banking app Revolut is launching in the US today". The Verge. Archived from the original on 2021-07-15. Retrieved 2021-07-13.
  44. ↑ "How we keep your funds safe (UK)". Revolut Blog. 14 March 2023.
  45. ↑ Makortoff, Kalyeena; Isaac, Anna (2023-02-20). "Revolut: can the chancellor's fintech favourite fix its image problem?". The Observer. ISSN 0029-7712. Retrieved 2023-11-14.
  46. ↑ Braileanu, Rob (25 June 2018). "Why has my account been locked and how to regain access?". Revolut. Revolut Ltd. Archived from the original on 2 September 2021. Retrieved 23 February 2020.
  47. ↑ Marks, Oliver (17 January 2019). "Revolut's clumsy automated bank compliance results in frozen accounts and lack of customer service". ZDNet. CBS Interactive. Archived from the original on 20 September 2020. Retrieved 23 February 2020.
  48. ↑ Barker, Sam (21 January 2020). "Revolut customers locked out of accounts 'for weeks'". The Telegraph. Archived from the original on 26 February 2020. Retrieved 23 February 2020.
  49. ↑ Palmer, Kate (8 February 2020). "Monzo and Revolut: customer complaints are mounting at digital banks". The Times. Archived from the original on 23 February 2020. Retrieved 23 February 2020.
  50. ↑ Hunt, Marianna (25 January 2000). "Revolut could face lawsuit from customers locked out of their accounts". The Telegraph. Archived from the original on 25 February 2020. Retrieved 23 February 2020.
  51. ↑ Hunt, Marianna (24 January 2020). "Ex-UCL lecturer forced to travel to London from France in attempts to unblock digital bank account". The Daily Telegraph. Archived from the original on 6 March 2020. Retrieved 27 February 2020.
  52. ↑ Dunkley, Emma (23 February 2020). "Nikolay Storonsky's Revolut freezes accounts in money-laundering bungle". The Times. Archived from the original on 11 January 2021. Retrieved 23 February 2020.
  53. ↑ "Revolut: Blocked Accounts". finews.com. finews AG. 1 September 2020. Archived from the original on 1 September 2020. Retrieved 1 September 2020.
  54. ↑ Mellino, Emiliano (28 February 2019). "Revolut insiders reveal the human cost of a fintech unicorn's wild rise". Wired. Archived from the original on 1 September 2021. Retrieved 1 March 2019.
  55. ↑ "Digital banks Monzo, Revolut, Starling and N26 compared". Sifted. 18 December 2019. Archived from the original on 23 October 2019. Retrieved 20 December 2019.
  56. ↑ Emiliano, Mellino (4 June 2020). "Revolut staff claim they've been told to quit their jobs or be fired". Wired. Archived from the original on 2 April 2021. Retrieved 5 June 2020.
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