Revolut, a UK fintech last valued at US$75 billion ($104 billion), has been approved to operate banking services in Australia. It plans to spend “nearly” $400 million to win over the local market.
Key Takeaways
- Revolut will be expanding its Australian offerings after scoring a banking license from Australia’s prudential regulator.
- The fintech is the UK’s big startup success story, last valued at US$75 billion, and is seeking to pry customers away from Australia’s big banks.
- Its new license allows it to offer savings and credit accounts to Australians, adding to existing foreign exchange and trading services.
- Revolut’s challenge to Australia’s Big Four banks comes amid an attack from Macquarie, with the investment bank recently launching retail offerings.
- The startup’s founder, Nik Storonsky, says an Australian banking offering has been a long-planned step in its long-term goal of building the world’s first global bank.
- Revolut has operated in Australia since 2020 and has 1.2 million customers here.
Key background
The Australian Prudential Regulation Authority has granted Revolut an Authorised Deposit-taking Institution licence, allowing it to take deposits from the general public, supply savings accounts and offer loans and credit cards. It is, in short, a direct challenge to Commonwealth Bank, NAB, ANZ and Westpac from a deep-pocketed rival.
The Big Four banks were already dealing with the prospect of becoming the Big Five after Macquarie Bank began encroaching on the incumbents’ territory with high-interest transaction accounts and mortgage accounts.
Revolut is the UK’s blueprint for a local startup taking on the world -a success story roughly analogous to Australia’s Canva. It was founded in 2015 and is today worth US$75 billion. In that time it’s grown from a startup issuing cards holding multiple currencies, good for travellers and expats, to a fintech giant seeking to become a global bank.
Like Canva, market commentators have long speculated on when Revolut would IPO. The answer is likely not soon, as Revolut is reportedly mulling a secondary share sale – which allows staff and early backers a chance to sell their equity to new investors – that would value the fintech at US$115 billion.
Big Number
3 per cent. That is the interest Revolut is offering for its basic personal savings account for new customers, a more competitive rate than those offered by incumbents. Commonwealth Bank’s equivalent transaction account rate, for instance, is 2.15 per cent. (Commonwealth Bank’s saver account offers circa 5 per cent if certain conditions are met.)
The bigger but older number is $400 million. Revolut said earlier this year it would spend “nearly” that amount in the next five years to establish itself as a player in Australia. That money would be invested in local talent and product development.
Crucial Quote
“Becoming a bank in Australia marks a defining moment in our journey, achieved through a relentless focus on delivering a better financial experience for Australians,” said Matt Baxby, CEO of Revolut Bank Australia.
“It’s the launchpad for our next chapter, enabling us to expand into a broader suite of products, including savings and credit, to sit alongside the innovative services our customers already rely on every day.”
Revolut founder and CEO Nik Storonsky added: “Launching our Australian bank has been a long-term strategic priority and marks another significant step in our mission to build the world’s first truly global bank.”
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