Revolut an English fintech company offering banking and investment services to consumers. Founded in 2015 by Nikolay Storonsky and Vlad Yatsenko, the company initially produced a low-rate travel card. Storonsky in particular was an avid traveler who became tired of spending hundreds of pounds on currency exchange and foreign transaction fees. The Revolut app and core banking account are free to use. Instead, money is made through a combination of subscription fees, transaction fees, perks, and ancillary services.
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Revolut Origin Story
Revolut is a British fintech company offering consumer banking and investment services.
The company was founded in 2015 by Nikolay Storonsky and Vlad Yatsenko after the former became tired of spending hundreds of pounds on currency exchange and foreign transaction fees while traveling.
With a background in finance, Storonsky knew that the rates he was receiving were not the best rates currency exchange platforms could offer consumers.
Unable to find a solution that minimized the cost of spending money overseas, Storonsky and Yatsenko set about developing one themselves.
Revolut’s first product was a travel card that enabled international travelers to change money into thirty different currencies at market rates.
The Revolut exchange platform was officially launched in July 2015 with a small round of investment funding worth $3.5 million.
Additional capital and expansion
In 2016, Revolut passed 100,000 users and secured Series A funding worth $15 million.
This was followed by a Series B round in 2017 ($66 million) and a Series C round for $250 million the following year.
At some point, Storonsky and Yatsenko pivoted somewhat and built a super app for younger consumers who preferred to access financial services on their smartphones.
Investment capital was used to expand Revolut’s product lineup with crypto trading, business accounts, and a donation service where users could support international charities.
At the end of 2018, the company received a banking license from the European Central Bank, which authorized it to offer consumer credit and accept deposits.
Six months later, Revolut launched commission-free stock trading on the New York Stock Exchange (NYSE) and NASDAQ.
The company added extra functionality to enable users to book vacations from their app and withdraw earned pay ahead of time to manage their expenses.
Revolut’s Value Proposition:
Low-Cost Banking: Revolut provides users with access to a free core banking account, helping them avoid traditional banking fees.
Currency Exchange: The company offers competitive foreign exchange rates and allows users to hold and exchange multiple currencies within their accounts, saving on currency conversion fees while traveling.
Subscription Plans: Revolut offers premium subscription plans (Plus, Premium, and Metal) that provide additional features, such as customizable cards, priority support, cashback, and more, catering to users’ specific needs.
Cashback and Rewards: The Revolut Rewards program offers personalized cashback offers and discounts on various purchases, helping users save money on everyday expenses.
Insurance: Revolut provides insurance options, including device insurance and travel medical insurance, offering peace of mind and coverage at affordable rates.
Investment Services: Users can invest in stocks, commodities, and cryptocurrencies, starting with small amounts, making investing accessible to a broader audience.
Personal Loans: Revolut offers personal loans with flexible terms, allowing users to borrow funds when needed, with the company earning interest and potential overdraft fees.
Payment for Order Flow (PFOF): While users enjoy commission-free trades, Revolut collects payment for order flow (PFOF), which helps generate revenue from trading activities.
Customer Segments:
Frequent Travelers: Travelers benefit from Revolut’s competitive foreign exchange rates, fee-free spending abroad, and travel insurance options.
Budget-Conscious Consumers: Users looking to save on banking fees, currency conversion charges, and everyday expenses appreciate Revolut’s low-cost banking and cashback rewards.
Investors: Individuals interested in investing in stocks, commodities, and cryptocurrencies, especially those looking to start with small amounts, find Revolut’s investment services appealing.
Tech-Savvy Millennials: Younger consumers who prefer managing their finances through mobile apps and seek convenient, digital banking solutions are a significant user segment.
Small Business Owners: Revolut offers business accounts and financial services, making it attractive to entrepreneurs and small business owners.
Digital Banking Enthusiasts: Customers interested in exploring digital banking and fintech solutions are drawn to Revolut’s innovative offerings.
Distribution Strategy:
Mobile App: The Revolut mobile app serves as the primary distributionchannel, allowing users to open accounts, access various financial services, and manage their finances conveniently.
Online Marketing: Revolut employs online marketing strategies to reach and acquire new customers through digital advertising, social media, and referral programs.
Partnerships: The company collaborates with other businesses and platforms to expand its user base and offer additional services, such as its partnership with Visa.
Word of Mouth: Positive user experiences and word-of-mouth recommendations contribute to customer acquisition and retention.
Marketing Strategy:
Cost-Saving Messaging: Revolut emphasizes cost-saving features, such as fee-free spending abroad, competitive exchange rates, and cashback rewards, in its marketing campaigns.
Digital Marketing: The company utilizes digitalmarketing channels to target tech-savvy and digitally engaged audiences, showcasing the convenience of its app-based banking services.
Educational Content: Revolut provides educational content, blog articles, and guides to help users make informed financial decisions, build trust, and establish itself as a reliable financial partner.
Referral Programs: Revolut encourages users to refer friends and family through referral programs, offering incentives to both referrers and referees.
Partnership Announcements: Announcing strategic partnerships and collaborations, such as the Visa partnership, helps increase brand visibility and attract new users.
User Engagement: The company engages with its users through social media platforms, responding to inquiries, sharing updates, and fostering a sense of community.
Revolut revenue generation
The Revolut app and core banking account are free to use.
Instead, money is made through subscription fees, transaction fees, perks, ancillary services, and payment for order flow.
Subscription plans
Firstly, there are three paid plans which give extra functionality to the core banking account:
Plus (£2.99/month) – offering the free UK and Euro IBAN account with a customizable card.
Premium (£6.99/month) – offering all Plus features in addition to exclusive card designs, 24/7 priority support, and access to so-called Junior features that help kids manage their money.
Metal (£12.99/month) – offering all Premium features, cashback on card payments, and three free international payments per month. Premium users are also sent a 100% contactless debit card made from reinforced stainless steel.
Rewards
The Revolut Rewards scheme allows users to enjoy personalized cashback offers and discounts on eligible purchases.
Rewards bonuses are credited to user accounts and encompass purchases from entertainment, travel, restaurant, grocery, and retail businesses.
In all likelihood, Revolut receives a commission from each merchant and then gives its users a portion of the fee as a bonus.
Insurance
The company also has two insurance options:
Device insurance – global coverage is offered for £1 per week and covers all accidental damage.
Travel medical insurance – here, Revolut uses geolocation technology to only charge consumers for days they are overseas. Medical and dental coverage starts from as little as £1 per day.
Trading
The Revolut trading platform allows users to trade stocks, commodities, and cryptocurrencies such as Bitcoin, Ether, and Stellar.
Users can get started for as little as £1 by purchasing fractional shares.
Plus and Premium subscription members can access a certain amount of free monthly trades. Each additional trade is charged at a flat fee.
Loans
Users can also take out a personal loan for between £500 and £25,000 with a payback period of 1 to 5 years.
The company makes money by charging interest on the loan and, where applicable, overdraft fees for late payments.
Payment for order flow
Payment for order flow consists of a “kickback” or commission that the broker routing customers to a market maker (in charge of enabling the bid and ask price) will pay a commission to the broker as a sort of market-making fee.
Revolut also collects payment for order flow (PFOF) to earn money from commission-free trades.
Essentially, PFOF is the compensation a broker (Revolut) receives from a market maker for sending customer trade volume their way.
Key takeaways:
Revolut is an English fintech company offering banking and investment services. It was created after co-founder Nikolay Storonsky became dismayed at exorbitant foreign exchange and transaction fees while traveling abroad.
Revolut offers three paid plans which give extra functionality to their free bank account. The company also earns a commission through its cashback and rewards scheme.
Revolut has also established itself as an insurance and personal loan provider. Additionally, users can invest in stocks, commodities, and cryptocurrencies in fractional amounts.
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Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
