Bank access on the screen of your phone

Photo: Revolut

Financial technology companies such as Revolut are using smartphones to »steal« clients from banks, turning them into subscribers.

Innovative companies are changing the face of the finance industry. It is no longer necessary to go to the bank to access most financial services; all you need to do is have the right smartphone application. One of these is developed by Revolut. The use of the application with the same name is completely free, and the recent introduction of premium accounts allowed this three-year-old startup, founded by Vlad Yatsenko and Nikolay Storonsky, to seek new business opportunities offered by the subscription economy.

The basic idea behind Revolut is simple – cheaper, faster, and more comfortable financial services. Revolut was, and at its core still is, an issuer of a pre-paid MasterCard debit card, which offers users the option of free withdrawals from cash machines worldwide (up to 200 euros a month), sending money to friends, and payments in various currencies at extremely favourable exchange rates up to a value of 6000 euros per month. By introducing premium accounts, they now offer much more.

Revolut has around two million users, and processes around 1.8 billion dollars’ worth of transactions each month.

For 7.99 euros a month or 82 euros a year, users can access a plethora of new possibilities as part of their life per month. The most basic ones are free cash machine withdrawals of up to 400 euros per month, and an unlimited number and amount of payments in practically any global currency at exchange rates usually applicable to interbank transfers.

The advantages of this will be obvious to anyone who has ever gawked at their bank statement following a trip abroad, or got caught (for example in Croatia) in the nasty games banks play when they want to force those who use their cash machines to accept their incredibly unfavourable exchange rates.

Photo: Revolut

Additionally, the monthly fee that holders of Revolut’s premium account pay includes global health insurance with protection of up to 15 million pounds, compensation for lost or delayed luggage, and even insurance of the phone on which the app is installed – since one in three smartphone owners supposedly cracks the screen in the first year of owning it. 

For customers who travel a lot and perform several bank payments each month, Revolut’s premium account is certainly the right choice. We can’t ignore the fact that bank clients are also subscribers of a sort; they pay the bank a fixed amount which usually only covers account maintenance and possibly a credit card, while each payment or transaction – God forbid it be in a foreign currency – costs an additional fee.

Recently, Revolut introduced an additional Metal account, which offers subscribers all the benefits of the premium account and more, for 13.99 euros per month. In addition to a fashionable Metal card and higher limits, Revolut also offers cashback on their card amounting to 0.1 percent of their purchase. For a user spending 10,000 euros in transactions with Revolut’s Metal card, that would mean 10 euros in credit.

Investors trust Revolut’s business model, which is proven by the fact that in the spring of 2018, the company raised an impressive 250 million dollars in their first funding round.

Revolut was founded in 2015. Today, it processes around 1.8 billion dollars’ worth of transactions each month. The fact that it is now used by over two million users is even more impressive – that is almost three times as many clients as there are in the largest Slovenian bank, NLB. Over a quarter of subscribers use Revolut’s services every day.

Getting new clients is a key objective for most subscription economy companies, something Revolut is achieving with a quality service that strengthened customer relationships and opened the door to expanding their range of products and services. Premium accounts brought in new revenues and among the British online banks, they were the only ones who were on track and operating profitably at the beginning of 2018. But they have no plans to stop there; they’re already considering expanding their business and introducing new services for their subscribers.

Photo: Revolut

That is why in the spring of 2018, Revolut put itself on the market, raising 250 million dollars in their first funding round, giving the company a market value of 1.7 billion dollars. If it is successful in obtaining the banking licence it applied for in April, it will become serious competition for traditional banks. With that, its market value is projected to only increase, as is the range of services it will be able to offer its subscribers.