Revolut, one of the world’s highest-valued financial technology startups with a valuation of US$5.5 billion, has its eyes on Asia.
Following the US$500 million it raised from a series D funding round in February, the London-based startup recently opened remittance routes to India, Malaysia, Indonesia, and the Philippines. Revolut says it has over 10 million users worldwide and more than 60,000 users in Singapore.
“The goal is to build a global financial network and Asian countries are critical nodes of that network,” Eddie Lee, Revolut’s Asia-Pacific regional director of operations, tells Tech in Asia.
The company’s suite of financial solutions include cross-border remittances at mid-market exchange rates, peer-to-peer money transfers, and insurance as well as savings and budgeting tools. It also allows commission-free stock trading in the UK.
While the startup hopes to expand its services on a larger scale worldwide, navigating the varying dynamics and regulations across regions – even within Asia itself – pose a challenge. Revolut’s current product features in Europe, however, can shed light on what Asian users can expect in future.
The company didn’t specify how much it has earmarked for its expansion plans in Asia but said the region is a “very high” priority. At present, it has offices in Singapore, Tokyo, and Melbourne.
Rebranding from a travel card
In Singapore, over 30% of Revolut’s user transactions come from shopping and groceries, followed by spending on restaurant and dining at 24%.
The startup revenue-shares an interchange fee with Visa, which is charged to merchants on every transaction made via the Revolut card or app. It also offers annual subscription plans of S$99 (US$70) for Premium accounts and S$199 (US$140) for Metal accounts, which provide customers with perks such as discounts on airport lounge access, complimentary travel insurance, and unlimited quotas on foreign exchange transactions.
Revenue from its premium subscription plans climbed 154% last year, according to numbers the company released during its latest fundraise.
As governments impose sweeping lockdowns and travel restrictions to contain the spread of Covid-19, travel activity worldwide has slumped.
The pandemic has hastened Revolut’s rebrand away from being solely a travel card. “One of the challenges we see is that consumers still view us as a travel product, and we need to change that,” Lee points out.
But Revolut’s business, which is still hugely dependent on users’ cross-border transactions and spending activities, hasn’t seen a significant impact from the Covid-19 pandemic. “Thankfully, we’re not going down, but we’re not growing at the pace that we see ourselves growing,” Lee adds.
A finance super app
Lee, who previously led Uber and then UberEats’ operations in Asia Pacific, says that gaining the trust of users is more difficult for fintech firms than it is for ride-hailing or food delivery companies.
“People are very value-conscious,” Lee observes. And while for most businesses, that plays out in a straightforward price comparison, “it doesn’t work that way in finance,” he adds.
Given that, building an enduring business built on trust is a priority for Revolut, and its newly launched currency routes are part of that approach.
“We know there’s a big Indian community in Singapore and a big Filipino community in Singapore and in Japan. So we want to be able to serve the customers here who want access to these things [but] are currently being charged a large fee,” Lee explains.
Since 2015, Revolut has been operating without a full banking license in the UK, where its partnerships with local banks allows it to issue bank accounts to users.
The company may be pursuing a similar strategy in Singapore, where it’s opted not to apply for a digital banking license in Singapore last year, citing the high capital requirements – S$1.5 billion (US$1.1 billion) – for a full one.
“We ultimately cannot provide everything because finance is too broad and the needs are too niche. We really need partners to be successful in every country that we operate in Asia,” Lee notes.
A global financial network
Revolut is going up against tough competition in the space. TransferWise’s recent partnership with Alipay is a huge step for the London-based fintech company into the Chinese market, where inbound remittances were projected to hit US$70.3 billion last year, according to World Bank data.
In Southeast Asia, TransferWise has inked partnerships with multiple local e-wallet operators including Ant Financial-backed GCash and Dana, Gojek’s Go-Pay, and Grab partner Ovo.
This comes as Revolut continues to beta-test its product across a few markets in Asia Pacific, including Japan and in Australia. So far, it only operates in Singapore, but reports suggest that it could be rolling out in Japan in the coming months.
Lee shares that Hong Kong and India, where the startup is looking to hire new talent, might be Revolut’s next Asian markets, but he declined to reveal when those launches will be.
“We are building an infrastructure, not just in Southeast Asia, not just in Singapore, but across the world,” Lee says. “And we hope the infrastructure we build creates sustained differentiation that our customers can access – [one] that not many other players can offer.”