UK neobank Revolut announced that it has now amassed a total of 1 million customers since its launch in the summer of 2015.
It now has over twice as many customers as its domestic competitor Monzo, with 400,000, and double the amount of German rival N26, which recently revealed plans to expand to the UK by mid-2018, with 500,000 users. Revolut claims that it acquires up to 3,500 new customers per day.
Here’s how Revolut accumulated its customer base:
- Low cost foreign transactions. Revolut allows users to withdraw up to £200 ($267) a month for free outside of the UK, and charges no fees for card payments made abroad. By contrast, high street banks often charge high fees on travel services — NatWest charges users as much as £5 ($6.66) when withdrawing money outside of the UK, and up to 2.75% on card purchases. Revolut’s travel services are likely a major reason so many people have signed up for its accounts.
- Introducing a broad range of services. As well as a debit card for transactions, Revolut has other offerings including insurance for mobile phones, and personal loans. Enabling users to access such a variety of products from one app likely breeds loyalty among Revolut’s users as the more services a customer takes from one provider, the more committed they typically are to the brand.
- Its business model allows it to operate throughout Europe. Unlike its domestic competitors Monzo and Starling, Revolut does not hold its own license. Instead, it leverages the license of a partner which operates across Europe, allowing it to onboard customers from all over the region. In contrast, Monzo’s UK banking license only allows to operate in the UK. This move is paying off, as Revolut currently has 150,000 customers in France, and 360,000 in the rest of Europe in addition to its 500,000 users in the UK.
Revolut may have a lot of customers, but they aren’t necessarily using their accounts.Out of its users, only 180,000 are using Revolut daily, while 600,000 use it at least once a month. The once-monthly engagement with the app suggests that such customers are likely only using Revolut’s travel or international money transfer services, rather than treating Revolut as their primary account provider.
Hence, even though Revolut has a lot of customers, that doesn’t mean that they are actively using a majority of its services, which could make it difficult for the company to generate revenue and to cross-sell products to its user base. It therefore remains to be seen whether having a large customer base will be sufficient to ensure the sustainability of Revolut’s business.
Maria Terekhova, research analyst for BI Intelligence, Business Insider’s premium research service, has compiled a detailed report on digital-only challenger banks that:
- Looks at the different business models neobanks are adopting to compete with incumbents.
- Gives an overview of the neobank scene in different geographies.
- Explains the biggest obstacles neobanks still face, and how they can navigate them.
- Examines the opportunity big banks have to win the race to digital.
- Discusses what the banking scene of the future will look like, and who might come out on top.