You probably have Revolut on your phone — for holidays, to pay back a friend or to avoid foreign exchange fees. But your salary still lands in an account with BNP Paribas, ING, Belfius or another traditional bank. That gap tells the whole story. The Financial Times has devoted a long investigation to Revolut: founded in 2015, with no physical branches, the company is now worth more than any British bank except one. But Revolut is not yet really a bank.
A traditional bank takes your savings, pays you a tiny amount of interest and lends that money on at a higher rate to someone else. The difference between the two rates is its margin — that has always been the business of big banks. Most of Revolut’s revenue, by contrast, comes from fees: foreign exchange, crypto, card payments and subscriptions. Two radically different business models, two opposite ways of making money.
Lending money is not a job you can improvise
Lending money means giving a sum today and hoping to get it back in twenty years. Three conditions come into play. First, you have to know how to say no: a bank is above all a machine for refusing credit at the right moment, and that is built on decades of data. Then, you have to set capital aside behind every loan. And finally, you need cheap savings to lend out. Yet most Revolut users treat it as a convenient tool — they do not settle there.
Trust and fraud: Revolut’s Achilles heel
To lend, you need savings. To have savings, you need to be your customers’ main bank. And to be the main bank, you need trust. Yet, according to the Financial Times, the British consumer association Which? found that Revolut had the highest number of fraud complaints before the British financial ombudsman — ahead of much larger institutions.
It is sometimes said that Revolut wants to be the Ryanair of banking. To understand what that means in practice, and why the European Central Bank has slowed its growth in Europe, listen to Amid Faljaoui’s Chronique économique podcast.