- Key insight: While European digital banks like N26 and Monzo have previously struggled to crack the U.S. market, experts say Revolut's massive 70-million global customer base gives it the power and self-confidence to successfully pursue its own de novo charter.
- What's at stake: A national bank charter would allow the fintech to independently offer a wider array of products, provide FDIC-insured deposits and gain direct access to payment networks like Fedwire and ACH.
- Supporting data: Revolut plans to invest $500 million in the U.S. market over the next few years to back its charter application and build new products.
Overview bullets generated by AI with editorial review
U.K.-based fintech Revolut submitted an application for a U.S. national bank charter, the company announced Thursday.
If the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation approve the application, the company will establish Revolut Bank US, N.A and accelerate the company's expansion in the U.S.
The move brings the company closer to its goal of becoming "the world's first truly global banking platform," according to a Thursday press release from Revolut. An approval would represent a major milestone in its push into the North American market.
The fintech currently serves more than 70 million customers globally, and the company is "working towards 100 million daily active customers across 100 countries," according to Nik Storonsky, Revolut's co-founder and CEO.
Tapping a U.S. banking veteran
To lead its stateside expansion, Revolut appointed Cetin Duransoy as its new U.S. CEO. Duransoy succeeds Sid Jajodia, who will remain at the company as its global chief banking officer.
Duransoy brings decades of financial services and payments experience to the neobank. Most recently, he spent nearly three years as the U.S. CEO of the fintech marketplace Raisin, and he previously held senior leadership roles at Visa and Capital One.
The choice of a leader with a traditional banking background, rather than a background in an industry like telecom or ride-sharing, "says something" about Revolut's priorities, Christoph Stegmeier, a partner at consulting firm Simon-Kucher, told American Banker.
Duransoy's experience signals that consumer credit is high on the fintech's U.S. agenda, Stegmeier added.
Expanding the U.S. footprint
Revolut has been gradually expanding its presence in the United States as part of a global "super app" strategy.
The fintech recently rolled out secured credit cards in the U.S., which are a good option for underbanked consumers with thin credit files, Aaron Press, a research director at IDC Insights,
The charter application represents the next step in this growth. A national bank charter would allow Revolut to offer a greater selection of products, provide direct access to payment networks like Fedwire and ACH and offer FDIC-insured deposits.
Revolut is dedicating significant capital to back this expansion. The company
Beating the foreign neobank curse
Historically, European digital banks have struggled to gain a foothold in the highly saturated U.S. market. German digital bank N26
However, comparing Revolut's current push to the past efforts of Monzo and N26 may no longer be an accurate parallel, according to Stegmeier.
Neobanks today operate with "a different self confidence" when pursuing their own charters rather than buying traditional banks to obtain licenses, he said. Revolut, in particular, has gained significant professional experience applying for banking licenses in countries such as the U.K., France and Lithuania.
Furthermore, Revolut already serves more than 70 million customers globally, making the company "a very different caliber" than the foreign fintechs that came before it, according to Stegmeier.
Assessing Revolut's chances of success
Revolut faces steep costs to win American consumers. The U.S. carries the highest customer acquisition costs for banking globally with an average of $300 per customer per year compared to an average global acquisition cost of $100, according to Stegmeier.
The company will compete against entrenched domestic offerings, such as Chime, that already serve the mass market, according to Theodora Lau, founder of Unconventional Ventures.
Despite these hurdles, some experts are optimistic about the charter application.
"Overall, we are bullish on what Revolut can achieve in the market," Stegmeier said.
Revolut can target affluent customers and capitalize on commission revenues from foreign exchange and cryptocurrency trading, he said. This strategy fills a "white space" in North America, where domestic neobanks still offer a limited range of private banking products.
Revolut also brings distinct advantages from its international experience. The company carries strong brand recognition, and its product breadth is a "strong plus," according to Lau.
"One of their core strengths is support for multi-currency, which will appeal to those who are digital, mobile and global," Lau told American Banker.
But not everyone reads the moment as favorably. Emmett Higdon, director of digital banking at Javelin Strategy and Research, said much of the current rush to the U.S. is being driven by the charter-friendly environment in Washington, and that the explosion in applications "should be viewed as placeholders for yet-to-be-defined strategies to address the hyper competitive digital bank space in the U.S."
While the wave of applications is "a good sign for the health of the fintech space," Higdon cautioned that "the landscape will remain littered with failures caused by a lack of appreciation for the unique needs and expectations of the U.S. consumer."
Higdon pointed to Revolut itself as an example. "Even international rock star Revolut is throwing financial fettuccine against the wall to see what sticks," he said. "A one-size-fits-all global digital banking play will never prosper in the U.S."
