WEBVTT
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Okay, so Revolut is one step closer to becoming a bank in America.
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Last week the US regulator gave it conditional approval, and Revolute is now committing half a billion dollars, 18 months of work, and its reputation as Europe's most valuable fintech to the one market that has broken every European challenger that's tried it.
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Because America doesn't give second chances.
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Monzo spent six years there and never got a license.
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Wise applied and was refused, and Viro, the first American fintech ever to win one of these licenses, spent$100 million getting it, lost a quarter of a billion the following year, and is still losing money today.
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And the market itself is saturated, ruthlessly competitive, and about to get more crowded as the regulator has approved more banks this year than in the previous five combined.
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New Bank, a 120 million customer giant, got its approval seven months before Revolut.
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And then there's Chime, the biggest US fintech, with over 10 million customers and more new accounts being opened than any other bank in America.
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So there is a lot on the line for Revolut.
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And owning a bank in the US will either be a master stroke or a total disaster.
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So the question for this episode is simple.
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Has Revolut just made the smartest move in its history or its most expensive mistake?
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So Jan, let's start with what Revolut actually has so far.
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What did the regulator say yes to and what's still outstanding?
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Yeah, Johnny, when I first read the headlines, I thought Revolut received the American banking license, but that's not quite true.
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They've received preliminary conditional approval to form a bank, not a license to open one and take deposits immediately.
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It's the first part of the approval process.
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Um there will be additional steps required in order to get that license.
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As an example, they have to meet certain uh capital requirements.
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I believe$95 million of paid in capital before they can open one.
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And there needs to be uh federal reserve approvals, obviously, and then also final sign-off from the the OCC that's the entity controlling diesel banks in in America and issuing approval for banking licenses.
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It looks like Revolute will be able to receive their banking license in 2027, which is huge news.
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I believe it's been only a few months when we first talked about their plans in America, and I believe one part of the discussion back then was they were looking to potentially acquire an American bank in order to get this license with ease, right?
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And now they are yeah, basically on track to receive a license on their own, which is huge news.
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What I also find interesting, Johnny, you know, Revolute, they've been struggling to get banking licenses for quite some time.
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And then within within 2026, it's it's I believe the third banking license they've received.
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They've just received the UK one, they've received their the Mexican one, if I'm not wrong, um, and now potentially the US one, at least the first steps to get it.
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The fact that this is now all coming at the same time is not random.
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I believe that's been the result of hard work, um, decades of hard work, of proper structuring, right?
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Um actually being, you know, having processes that matches the processes of a bank and not just a modern fintech startup because it yeah, does need some some different um yeah requirements, that's for sure.
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Yeah, I mean I I don't even know if I'd say decades, yeah.
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I mean, over the last couple of decades, they've really cleaned up their act.
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If you if you look back, sorry, even a decade.
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I mean, if you look back over sort of 2021 when BDO announced, or at least they had that awful, awful report where BDO said they couldn't account for nearly what, half a billion pounds of revenue?
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I think it was 450 million, maybe.
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That I think that was really probably one of the lowest moments in the history of Revolute.
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Um and was partly one of the reasons why they withdrew the application from California, which was their original attempt if you're unaware of the US.
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They applied for a state charter in California with FDIC insurance, and that didn't necessarily fail, but I think it was quite clear to them that they weren't going to get the license, Yan, so they pulled out.
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Or they pulled out.
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Someone's gonna say something about that.
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But you know what I mean.
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They withdrew.
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They withdrew.
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Um leaving what was a bit of a void because they hadn't really spoken about that license attempt at the time, Jan.
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And when it fell through, there was not much talk in the press or the the the at least from Revolute's perspective, they weren't really talking about it.
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They were quite hush-hush about it.
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That attempt, I think, was quite poorly executed.
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And it really comes down to, I think, this attempt, you know, really comes down to the execution process, going back to what Jan was saying about cleaning up their act, essentially putting things in place to be a more legitimate official looking entity.
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Having the UK banking license, Yan plays a big part in this, doesn't it?
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Like they that comes with a lot of legitimacy.
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The relationship between the Federal Reserve and the Bank of England, that's going to be extremely powerful.
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And I think that's gonna open up really the rest of the world to Revolution in terms of getting licenses in the future.
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What they have currently, I think, is quite interesting in the US Yan.
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I think that's something that we should quickly touch on for those that are unaware of their offering, because it is a lot thinner at the moment.
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And even though they haven't got uh their own charter or their own official license, they do operate through partner banks.
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Uh there's Sutton Bank, LEED, Lead Bank, and Crossriver.
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Is that right?
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That's right.
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Yeah, so they're operating in the US through a number of partner banks that allows them to offer certain products like credit cards, for example, but they're not able to capitalize on those, on, on the potential uh income that they could generate from those products because the partner banks have own the own the economics.
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So that's obviously a reason why they want to get licensed.
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But it does allow them to have certain products.
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The offering is very thin at the moment, though.
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There's the standard account, the premium account, the metal account.
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I think metal is 16.99 yen in the US, but it's thin.
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Like if we flick through the Revolut website for the US entity, it's very thin.
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There's not a huge amount happening there.
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They operate operate currently out of New York, they'll be moving to Stanford, Connecticut, with I think a goal to hire roughly 160 staff, or at least have 160 staff at launch.
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Um, they currently have a million active users?
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It's not bad.
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I'm curious.
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It's not bad, but I'm curious to get your thoughts on this.
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And particularly thoughts of anyone who's watching in the US at the moment, maybe you've used the Revolue product.
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What do you make of it?
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But just a million customers, Jan?
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Johnny, I I'm pretty sure they haven't really tried getting more customers.
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I think that was that's the whole point.
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I think this was more of an organic growth without a lot of marketing required.
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Obviously, they've they've done marketing that was also visible in the US as an example, or the Formula One team.
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Formula One is huge in in the US.
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I believe they're there, what's that, four races uh scheduled in the US, something like that.
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Um, and it's it's becoming just more popular every single year.
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Um so that gave them some visibility.
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But aside from that, was there a lot of marketing efforts in the US?
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Probably not.
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Um, and I think that's something that will change really, really quickly once they receive the actual banking license, once they are they have to go to onboard more American customers under their their own um entity.
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You'll quickly see them scale up from 1 million to 10 million and so on.
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I'm pretty sure it's just a natural process.
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Besides the marketing push, what can we expect that will be different?
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This episode is sponsored by no one really, just Jan and I and our website, depositscout.com.
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Jan, do you want to just share one?
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My favorite feature is the rate history graph, Johnny, because it quickly tells you which products are worth signing up for right now and which are not.
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So deposit scout.com is free to use.
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Link in the description box.
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We'll put it in the show notes.
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Check it out.
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It's the best way to support Jan and I.
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That's depositscout.com.
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Thank you very much.
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They have to launch this entity, this bank, by March 2028.
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Otherwise, the license application expires.
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That's an important nuance to remember, everyone.
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And that gives you an idea of the timeline here and when you can expect Revolute US, let's say the official Revolute US bank to launch.
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What can we expect that's gonna be that different?
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I mean, at the moment they're essentially a prepaid credit card or a prepaid debit card, I should say, with some multi-currency functionality, with some plans, and you know, I I don't know.
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I think you might be able to get personal loans.
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It's hard to tell.
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You know, what's gonna be hugely different to that though?
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You know, I can't.
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Johnny, I mean Port American It's gonna really besides the market.
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Just a different entity handling the um the account.
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Currently, there's deposit protection in place.
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Mate, that's supposed to entice people, that's supposed to get people in the door, and it's not gonna change.
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Yeah, that's the second part of the story.
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They obviously have to make their product more competitive in order to, especially on a credit card base.
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If you look at the credit cards, I think they're slightly underwhelming compared to what's available in the US.
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Um, you can get huge credit cashback cards there, um insane signup bonuses, hundreds of dollars potentially just for getting credit cards.
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And yeah, Americans love credit cards.
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Really?
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It's um there I think there are more credit cards than people over there.
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And in order for Revolute to compete with this already heavily saturated market, they really have to be be innovative, they have to do more than what they're doing right now, at least that's my opinion.
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So Americans, they might see more more features, you know, more enticing products being launched, but besides that, not a lot will change.
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I mean, the the the the deposit protection will be the same.
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Maybe that will entice customers though, saying, you know, your deposits are with Revolute Bank versus saying your deposits are with you know X bank in Minnesota that no one's heard of.
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You know, that might entice more deposits, that might help, you know, get more customers through the door.
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Potentially, but what's the actual difference, right?
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Uh the FDIC limit is£250,000.
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That's the deposit protection they have in America.
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Um, for listeners from UK that might not know that, and that's quite a large amount, and that will not change whether it's it's uh Lead Bank, Cross River Bank, Sutton Bank, or Revolut Bank that holds the money.
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That will not change.
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Um and therefore I don't see much, yeah, I don't see much of an argument here.
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Um I don't I don't think this will entice more American consumers to use Revolute.
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I think it's already really, really difficult market to succeed in, um, especially as European fintech.
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Right now, the you know political situations, the the news, right?
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It's seems slightly hostile.
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Seems like there's some frictions.
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I'm sure if you've you've watched the BBC or CNN or whatever news medium you follow, you'll you'll notice it's not easy for a European company to succeed in America nowadays.
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And I think American consumers, they're more skeptical than ever towards European companies coming in and trying to um explain them how to do their banking, right?
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And the market right now, uh it's it's hugely competitive.
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And I'm I'm thinking of one player in specific when I say that, and it's Chime.
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Chime is such an attractive um digital bank, um, almost too hard to beat.
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I don't know what Revolute can do in order to compete with this, but it's it's insane.
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Chime Prime, that's one one plan I want to mention, um, which is basically their top tier.
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Um, it's not paid, there's no monthly fee involved, but you get incredible benefits.
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As an example, two free launch visits per year, just like that, five percent cashback on up to fifteen hundred dollars worth of transactions in one category, it only requires three thousand dollars per month in deposits.
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It's insane, right?
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Getting five percent of cash back on fifteen hundred dollars and two free launch visits per year just for you know, just for using the account.
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I think that's fascinatingly good, right?
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In Revolute, they they also offer launch launch visits, obviously, unlimited launch visits of metal, but how many of those will you actually use in a year?
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You know, unless you're a frequent traveler, maybe maybe two, three, right?
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So it's it's not much of a difference, I would say, for the average American.
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And then they charge, how much is it for metal?
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$16.99?
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You know, that's a lot of money, right?
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Yeah, compared to a free product, it's almost as good.
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And if you look at the cashback benefit solely, it's most likely better even than what Revolute has to offer with the RevPoints.
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Better than Rev points that you have to pay to get the best.
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That's the thing, right?
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That's the thing.
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It really depends on the tier um which you're in.
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Which I would assume they can't afford to do in the US.
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That's an interesting thing to consider.
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I have to step up the game, that's for sure.
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Like notoriously competitive the credit card market is in the US and how important credit card interchange fees are going to be to Revolut.
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I can tell you now that credit cards are going to be everything for Revolut in the US market.
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And there's a very specific reason for that, at least because debit card interchange fees are capped.
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Any bank with over$10 billion in assets has the interchange fees capped at, I believe, 0.05%.
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So every time a customer swipes their debit card, then it's going to be a loss leader for Revolut.
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That's if they choose, Yan to hold over$10 billion in assets.
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Um, their partner banks specifically don't.
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They make sure they stay under.
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So, you know, the banks or the entities they partner with have more lucrative interchange fees, which is going to be very good for a bank like Chime.
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That's one of the reasons why they can subsidize such a great free account, Jan, because they've partnered with small banks that hold less than$10 billion in assets.
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So they're making a lot more on interchange.
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That's CIME, and that's how they can fund these fantastic free accounts.
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Appreciate the creativity to circumvent these regulations, Johnny.
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Yes, yes, they they're very creative in the ways that they do it.
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You know, some balance sheet manipulation.
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Oh, don't say that.
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Don't don't say manipulation.
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Restructuring, balance sheet restructuring.
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That sounds like a crime.
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Good.
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No one's committing a crime, it's all legal.
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Um just yeah, creativity.
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Yeah, no, no, Jan is right.
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Yan is right.
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And and Revolute will strive to be bigger than$10 billion in assets.
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So they're gonna they're gonna forgo the, they're gonna, they're not gonna be fussed by debit card interchange because they're not gonna be able to generate any fees from it.
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They're gonna want their customers to transact with credit cards, which means you can guarantee that the Revolute credit card in the US market is going to be favorable.
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It's gonna have a decent welcome bonus.
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But Yan, they can't possibly pay all 1 to 1.5 Rev points per dollar spent or like they do in the UK and Europe per pound per euro, can they, mate?
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They cannot ask customers to pay$16.99 to access a credit card that will be just about on par with the same earning rate as, say, the Amex Platinum, for example, in the US market.
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Not at all.
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Not at all.
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At least not with additional benefits.
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I mean, they can they can certainly ask for it, but I don't think American consumers will will find this very enticing and then um use this as a reason to switch.
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I think a credit card really needs to come with one thing, and that's actual cashback.
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Because the market is so competitive and there's so many competitors out there offering actual cashback.
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Um, even debit cards offering cashback, Chime Prime is an example.
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So you really gotta do something, right?
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You gotta you gotta bring in actual cashback, which is always more attractive than than receiving points and having to convert them afterwards, at least for me, and I'm sure for for other consumers as well, they'll think similarly.
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It's always a always a hassle to have to think about how to redeem points, you know.
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I'd much rather just have the money deposited to my account and I can use it when I when I buy groceries in the in the in the supermarket, you know.
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So this will be very, very interesting.
00:15:55.600 --> 00:16:00.480
And I think also one thing that's going to be very exciting, um, Nubank.
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They also received their banking license very, very recently.
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Nubank, that's this gigantic fintech um from Brazil originally, with I believe 127 million customers worldwide.
00:16:12.879 --> 00:16:19.279
And yeah, they're gonna they're gonna start in the US, probably launch at uh at roughly the same time than than Revolute.
00:16:19.600 --> 00:16:19.759
Possibly.
00:16:20.159 --> 00:16:26.559
Which is going to be yeah, possibly before, most likely before, actually, because they've received their conditional approval in January 2026.
00:16:26.639 --> 00:16:31.279
Um so most likely they'll they'll start relatively soon, I believe.
00:16:31.519 --> 00:16:39.200
And considering US population also has a you know, a lot of people have a um um what's it called?
00:16:39.360 --> 00:16:41.200
Um I know what you're about to say, yeah.
00:16:41.440 --> 00:16:48.720
You are you're talking about like the Spanish connection, the sort of South American, Central American connection of Newbank and North American.
00:16:48.960 --> 00:16:51.200
Yeah, a lot of you know a lot of I can see that relationship.
00:16:51.440 --> 00:16:57.279
Actually, a lot of US residents have a um have a background from from these countries, South American, Central American background potentially.
00:16:57.519 --> 00:16:58.000
It's a really good point.
00:16:58.240 --> 00:17:00.879
So they might feel more familiar with with Newbank, right?
00:17:00.960 --> 00:17:03.440
Maybe they have family over there that already uses Nubank.
00:17:03.519 --> 00:17:08.079
Nubank is live in in Brazil, um, Mexico and Colombia, I believe.
00:17:08.400 --> 00:17:14.880
So there will be families familiar with the product, and they will recommend that to the to the US family.
00:17:15.119 --> 00:17:22.400
And I think they'll have it a lot easier potentially than a British neobank launching that no one really knows over there.
00:17:22.720 --> 00:17:25.359
I think that's gonna be one of the hardest things for Revolut to get on with.
00:17:25.440 --> 00:17:32.240
I think you know a million customers might know who they are, but what percentage of the market doesn't know who Revolut are, regardless of the amount of marketing they've been doing?
00:17:32.400 --> 00:17:33.680
I think that's gonna be a huge challenge.
00:17:33.920 --> 00:17:35.279
You think this could go south, Johnny?
00:17:35.519 --> 00:17:37.200
I'd like to hear from other people in the comments.
00:17:37.359 --> 00:17:45.680
I mean, look, let's get through the episode first before we we we we kind of finalise our opinion, but at this stage, based on what we're saying, I'm not I'm not bullish.
00:17:45.759 --> 00:17:46.480
I I'm really not.
00:17:46.559 --> 00:17:48.960
I think they are taking on a huge challenge.
00:17:49.119 --> 00:17:51.759
I mean, let's just talk about the incumbents for a moment, man.
00:17:52.400 --> 00:17:53.200
What who have we got?
00:17:53.279 --> 00:17:56.799
We've got just a couple of big players or or or names that you may have heard of.
00:17:57.039 --> 00:18:10.160
Um JP Morgan, uh Chase, City, Bank of America, you know, people deposit their money with these uh providers because of reputation, because of uh history.
00:18:10.559 --> 00:18:12.160
Trust trust, thank you, mate.
00:18:12.240 --> 00:18:14.799
Revolute have n Revolute have some of that.
00:18:14.880 --> 00:18:15.839
I wouldn't say none of that.
00:18:15.920 --> 00:18:17.680
They do by all means have some of that.
00:18:17.920 --> 00:18:29.440
But to ask people to deposit large amounts of money into the account, I mean they're gonna have to offer some lucrative uh yield, uh high yield savings account, 100%.
00:18:30.480 --> 00:18:42.400
They're gonna I mean for them to succeed in America, Yan, they are going to have to bring a lot of money across and resource to invest in in gathering customers.
00:18:42.720 --> 00:18:48.480
The US market has the highest average acquisition cost for a person.
00:18:48.640 --> 00:18:50.640
Globally, the average is about$100.
00:18:51.200 --> 00:18:53.200
In the US, it's$300.
00:18:53.759 --> 00:18:59.359
Now, if you've got, you know, if you've got your site set on a million customers, oh well, it's not too bad, is it?
00:18:59.519 --> 00:19:09.200
But if you've got your site set on tens of millions of customers, well, that gives you an idea, Yan, of how much money you're talking that's needed to invest in this market.
00:19:09.359 --> 00:19:10.880
There's a lot on the line here, isn't there?
00:19:11.039 --> 00:19:16.400
And even just even just going back to Yan, what's going to happen when they transfer the existing customers across?
00:19:16.480 --> 00:19:24.559
And I don't know if anyone's familiar with this story, but back this this is quite important nuance, Jan, when you talk about how hard it can be to actually transfer customers across.
00:19:24.720 --> 00:19:36.880
Back in April 2018, TSB moved around 5 million customers off Lloyd's and onto a new platform that they'd built from like a I believe like a Spanish bank or they're they're like Spanish bank owners.
00:19:37.039 --> 00:19:39.680
Anyway, the whole thing went b went south.
00:19:39.920 --> 00:19:41.759
Customers were locked out for weeks.
00:19:42.000 --> 00:19:46.559
Um customers could even see, Yan, other accounts on the platform.
00:19:47.039 --> 00:19:50.000
So of course, like fraudsters just piled in.
00:19:50.160 --> 00:19:53.519
And I think in the in the end, it cost TSB about 330 million pounds.
00:19:53.599 --> 00:19:57.680
They were fined like 50 million pounds, they lost that their CEO quit.
00:19:57.920 --> 00:20:00.480
Um it was a disaster.
00:20:00.640 --> 00:20:02.079
It was an absolute disaster.
00:20:02.319 --> 00:20:06.559
And that just I that just tells you as well, like what could potentially go wrong for Revolut.
00:20:06.799 --> 00:20:08.160
I mean, could that happen to them, Jan?
00:20:08.559 --> 00:20:10.240
It might, it might, you know, we don't know.
00:20:10.319 --> 00:20:24.240
But um what we know for a fact is that Revolut has had transitions like these in the past, um, as an example ofin the EEA um when they were first licensed as an e-money institution and then trans um transferred the customers to this Lithuanian banking entity.
00:20:24.559 --> 00:20:26.640
Was probably a similar process, I assume.
00:20:26.799 --> 00:20:31.440
And then right now it's happening in the UK as they've just received their banking license over there.
00:20:31.599 --> 00:20:37.359
Um so I think they're probably more likely to succeed with this than uh a bank who has never done it.
00:20:37.519 --> 00:20:38.880
But it's fascinating to me, Johnny.
00:20:38.960 --> 00:20:41.759
I had no idea that these things could go wrong, even.
00:20:41.839 --> 00:20:45.599
Um, I thought it was literally just switching, yeah, switching a button and simple, doesn't it?
00:20:45.839 --> 00:20:50.079
Um yeah, having the customer transfer it over, but it seems to be more complicated than that.
00:20:50.400 --> 00:21:00.079
I really want to talk about for a moment as well, Jan, the the the US, the UK, European as well, fintechs that haven't made it in the US or have tried and failed.
00:21:00.319 --> 00:21:11.440
I think this is interesting context as well to really just say, look, Revolut have done something here that's actually quite impressive, but at the same time, it's really somewhat come down to timing.
00:21:11.599 --> 00:21:15.759
So Monzo, we're aware, most of us are aware, I'm sure.
00:21:16.000 --> 00:21:18.720
UK Bank, they did have a go at the US.
00:21:18.880 --> 00:21:23.519
They, I think, went in around 2020, 2021, but they were unsuccessful.
00:21:23.759 --> 00:21:27.839
Mainly due to problems with their own accounts at home.
00:21:28.079 --> 00:21:32.960
Um, weren't big enough, weren't strong enough, they just weren't ready for it essentially.
00:21:33.200 --> 00:21:36.559
A couple years later, they pull out, I think in 2025.
00:21:36.720 --> 00:21:39.359
They also got the license in Europe, the ECB license.
00:21:39.440 --> 00:21:43.279
And I think they just said, look, Europe looks more, more, more possible, more logical for us.
00:21:43.359 --> 00:21:44.160
That's where we're gonna go.
00:21:44.240 --> 00:21:47.039
But I think eventually you could see Monzo in the US.
00:21:47.359 --> 00:21:53.200
Wise, interestingly, also failed to get their license, although it was somewhat slightly different.
00:21:53.279 --> 00:21:58.960
They were looking for essentially just access to like the Federal Reserve's plumbing system for like sending money, yans.
00:21:59.200 --> 00:22:09.279
So instead of Using Wise's partner banks when money goes in and out of the US, they could take care of it themselves so that they could save money that way and transfers would be faster and more efficient.
00:22:09.519 --> 00:22:10.319
That makes sense.
00:22:10.480 --> 00:22:14.000
But then at that point, they also got hit with an anti-money laundering fine.
00:22:14.160 --> 00:22:16.319
Um and they failed as well.
00:22:16.400 --> 00:22:17.519
So they were unsuccessful.
00:22:17.680 --> 00:22:21.039
So that's another revolute competitor failing.
00:22:21.519 --> 00:22:23.519
And then there's Bunk, Jan.
00:22:23.839 --> 00:22:27.200
You might know more about Bunk than me being from Germany.
00:22:27.359 --> 00:22:29.200
Um, but they didn't make it as well, did they?
00:22:29.359 --> 00:22:30.480
Yeah, no, not really, Johnny.
00:22:30.559 --> 00:22:37.200
And there was actually very, very recently that they were refused August 4th, and the reason was that they could not show where the capital was coming from.
00:22:37.279 --> 00:22:40.559
Um, and they they changed the figure mid-application without explanation.
00:22:40.640 --> 00:22:41.759
There were some other issues.
00:22:41.839 --> 00:22:51.200
Um, as an example, the the chief executive that was supposed to handle the American arm um was yeah, supposed to work part-time from outside the country.
00:22:51.519 --> 00:22:57.759
Those are things that these these regulators uh those are things that these these regulators don't like.
00:22:57.920 --> 00:22:59.279
And it makes sense, right?
00:22:59.440 --> 00:23:04.799
Would you would you trust someone working part-time remotely from outside of your country?
00:23:04.960 --> 00:23:08.880
Um, would you trust someone like that to hold a banking license?
00:23:09.119 --> 00:23:09.920
They didn't even try.
00:23:10.079 --> 00:23:10.480
I don't know.
00:23:10.559 --> 00:23:12.400
And you always have to keep one thing in mind, right?
00:23:12.480 --> 00:23:15.839
When these entities fail, you know, who pays the bill?
00:23:16.079 --> 00:23:17.279
The government, right?
00:23:17.440 --> 00:23:25.039
The American government basically guaranteeing that these banks that they regulate and supervise that they won't fail, right?
00:23:25.200 --> 00:23:30.079
So it's it's a calculated decision that these these regulators make, and it makes total sense to me.
00:23:30.319 --> 00:23:34.400
I still think America is worth the trouble for all of these providers.
00:23:34.559 --> 00:23:36.400
If they can succeed there, it's going to be huge.
00:23:36.480 --> 00:23:38.000
And that's, I mean, for obvious reasons.
00:23:38.079 --> 00:23:39.839
It's such a big country, first of all.
00:23:40.000 --> 00:23:48.400
And then also the the fact that um that American banking environment seems to be a little bit less digital than it is in the in the UK at least.
00:23:48.480 --> 00:23:50.720
Um that's my outsider's perspective.
00:23:50.880 --> 00:23:58.880
As an example, numbers of checks written, we have 9.2 billion in the United States in 2024, and only 91 million in the UK.
00:23:59.119 --> 00:24:06.240
Not sure how many were written in the U in Germany or in other European countries, um, probably even less, but it's very, very fascinating, right?
00:24:06.319 --> 00:24:08.160
So there's a lot to to digitize.
00:24:08.400 --> 00:24:16.000
Also, um, instant payments, only 344 million instant rate uh payments in the US made in 2024.
00:24:16.160 --> 00:24:18.960
I believe 5.6 billion in the UK.
00:24:19.039 --> 00:24:21.119
So that's uh very, very fascinating, Johnny.
00:24:21.200 --> 00:24:23.119
That's a gigantic country, biggest economy in the world.
00:24:23.200 --> 00:24:23.759
Yeah, right?
00:24:23.839 --> 00:24:26.799
If you succeed over there, yeah, you've made it, literally.
00:24:26.960 --> 00:24:32.319
You can for Revolut, this would mean they could live up to their gigantic valuation, right?
00:24:32.400 --> 00:24:36.240
It would mean you know, a lot of investors being satisfied.
00:24:36.319 --> 00:24:38.079
So it's it's hugely important for them.
00:24:38.160 --> 00:24:43.680
It's maybe the most important market to succeed in, yeah, I would say, but also the most challenging at the same time.
00:24:43.759 --> 00:24:55.680
But I do think there is space in the market, even though it is very saturated for expats, migrants, I think multi-currency people that hold multiple currencies in their accounts.
00:24:55.839 --> 00:24:57.279
I think there is space for revolution.
00:24:57.519 --> 00:25:10.720
The all-in-one super app is something that look, I'm not American, I I can't speak to this, but I know in the UK it's not something that people necessarily want, like they might have in China, for example, or in Asia.
00:25:10.880 --> 00:25:18.720
I'm curious to hear from people in the comments if you care for that, if you want to have all of your banking in one place, because right now, yeah, that doesn't really exist.
00:25:18.880 --> 00:25:26.319
Revolute could bring an all-in-one super wealth app to the US market, but yeah, do people in the States want that?
00:25:26.799 --> 00:25:27.839
Great question, Johnny.
00:25:28.079 --> 00:25:30.640
Anyone listening from the States, please write into the comments.
00:25:30.799 --> 00:25:32.160
Would love your perspective on this.
00:25:32.559 --> 00:25:34.000
Um, I personally don't think so.
00:25:34.079 --> 00:25:40.319
I think um a lot of people in America are skeptical towards super apps, and there's not a really I mean it doesn't exist right now.
00:25:40.480 --> 00:25:44.880
There's not not one super app existing as it does in in China, for example.
00:25:45.039 --> 00:25:47.039
Um, so I think it's yeah, it's difficult.
00:25:47.200 --> 00:25:51.039
Also, as a consumer, you personally, Johnny, would you want something like that?
00:25:51.279 --> 00:25:54.160
At least I know for myself, I'm good without it.
00:25:54.240 --> 00:26:03.839
I like my bank to to handle all banking-related topics for me, and I like my insurance to handle all insurance-related topics for me, and yeah, and so on, right?
00:26:03.920 --> 00:26:07.279
I don't need my my bank to provide a mobile plan all of a sudden.
00:26:07.440 --> 00:26:08.400
It's not needed, right?
00:26:08.480 --> 00:26:10.160
I'm I'm fine with my normal mobile plan.
00:26:10.400 --> 00:26:13.839
It might be a novelty to Americans, something new to try.
00:26:14.000 --> 00:26:15.599
That might be quite exciting.
00:26:15.680 --> 00:26:21.359
I I do think that one of the biggest plays that Revolute will make in the US will be the subscription platform.
00:26:21.440 --> 00:26:25.279
I think they will launch potentially Ultra.
00:26:25.440 --> 00:26:35.519
They will make a deeper, more valuable platform, or sorry, plan, I should say, um, to try to entice people to sign up and then bring across deposits.
00:26:35.839 --> 00:26:39.039
Like they've got to find a way to entice deposits ultimately.
00:26:39.119 --> 00:26:46.079
And having Ultra with uh different subscriptions, different products, so you can capture different people.
00:26:46.400 --> 00:26:48.880
That then might be a way to entice deposits.
00:26:49.039 --> 00:26:52.720
High yield savings will be very important for them in order to do that as well.
00:26:52.799 --> 00:26:54.559
Um and that's how they'll compete, I think.
00:26:54.799 --> 00:26:57.599
I I'm really at this point of the episode.
00:26:57.680 --> 00:27:04.160
I I'm you know, I'm I'm still I'm still not sure, Jan, about how they can succeed in the US in the market.
00:27:04.559 --> 00:27:05.599
Maybe they'll show us, Johnny.
00:27:05.839 --> 00:27:07.119
You know, maybe they would show us.
00:27:07.440 --> 00:27:07.920
I hope so.
00:27:08.240 --> 00:27:12.480
Maybe for us it's just a matter of of leaning back and watching the spectacle happen.
00:27:12.640 --> 00:27:14.960
Um I think they will they will surely try their very best.
00:27:15.039 --> 00:27:16.400
They have deep pocket, Johnny.
00:27:16.640 --> 00:27:21.119
Um, they're the the second biggest private uh fintech in the world, I believe.
00:27:21.200 --> 00:27:22.559
Um just saw that on LinkedIn.
00:27:22.640 --> 00:27:23.599
It's it's fascinating.
00:27:23.680 --> 00:27:25.440
So if they won't succeed, who will?
00:27:25.599 --> 00:27:26.400
That's the thing.
00:27:26.559 --> 00:27:33.920
And that makes me, you know, confident that they will they will manage this um this challenging market entry and they will succeed over there.
00:27:34.160 --> 00:27:37.920
Get in the comments, let us know your thoughts, you know, what we've talked about today.
00:27:38.079 --> 00:27:38.960
What do you think?
00:27:39.119 --> 00:27:40.960
Will Revolute be able to succeed?
00:27:41.200 --> 00:27:45.920
Based on your experience, if you're American, of you know the banking sector.
00:27:46.079 --> 00:27:48.720
Are you excited to see Revolute entering the market?
00:27:48.960 --> 00:27:53.680
Do you hold any negative sentiment towards Revolut because they're European?
00:27:54.000 --> 00:27:54.559
Me too.
00:27:54.720 --> 00:27:55.279
Very interesting.
00:27:55.519 --> 00:27:57.359
Please join our Discord if you haven't already.
00:27:57.519 --> 00:27:59.839
A lot of exciting conversations happening over there as well.
00:27:59.920 --> 00:28:01.119
We're gonna show something on the screen.
00:28:01.279 --> 00:28:03.519
I'm gonna also put a link in the description below.
00:28:03.680 --> 00:28:05.759
And um, yeah, see you in the next episode.
00:28:05.839 --> 00:28:06.240
Goodbye.
00:00:00.000 --> 00:00:03.040
Okay, so Revolut is one step closer to becoming a bank in America.
00:00:03.200 --> 00:00:17.839
Last week the US regulator gave it conditional approval, and Revolute is now committing half a billion dollars, 18 months of work, and its reputation as Europe's most valuable fintech to the one market that has broken every European challenger that's tried it.
00:00:18.000 --> 00:00:19.839
Because America doesn't give second chances.
00:00:20.079 --> 00:00:22.800
Monzo spent six years there and never got a license.
00:00:23.039 --> 00:00:35.600
Wise applied and was refused, and Viro, the first American fintech ever to win one of these licenses, spent$100 million getting it, lost a quarter of a billion the following year, and is still losing money today.
00:00:35.759 --> 00:00:46.479
And the market itself is saturated, ruthlessly competitive, and about to get more crowded as the regulator has approved more banks this year than in the previous five combined.
00:00:46.719 --> 00:00:53.039
New Bank, a 120 million customer giant, got its approval seven months before Revolut.
00:00:53.280 --> 00:01:01.920
And then there's Chime, the biggest US fintech, with over 10 million customers and more new accounts being opened than any other bank in America.
00:01:02.000 --> 00:01:03.920
So there is a lot on the line for Revolut.
00:01:04.079 --> 00:01:09.040
And owning a bank in the US will either be a master stroke or a total disaster.
00:01:09.200 --> 00:01:11.359
So the question for this episode is simple.
00:01:11.519 --> 00:01:16.159
Has Revolut just made the smartest move in its history or its most expensive mistake?
00:01:16.319 --> 00:01:19.280
So Jan, let's start with what Revolut actually has so far.
00:01:19.439 --> 00:01:22.799
What did the regulator say yes to and what's still outstanding?
00:01:22.959 --> 00:01:28.000
Yeah, Johnny, when I first read the headlines, I thought Revolut received the American banking license, but that's not quite true.
00:01:28.159 --> 00:01:35.359
They've received preliminary conditional approval to form a bank, not a license to open one and take deposits immediately.
00:01:35.439 --> 00:01:38.239
It's the first part of the approval process.
00:01:38.319 --> 00:01:41.680
Um there will be additional steps required in order to get that license.
00:01:41.760 --> 00:01:44.640
As an example, they have to meet certain uh capital requirements.
00:01:44.719 --> 00:01:49.439
I believe$95 million of paid in capital before they can open one.
00:01:49.599 --> 00:02:01.920
And there needs to be uh federal reserve approvals, obviously, and then also final sign-off from the the OCC that's the entity controlling diesel banks in in America and issuing approval for banking licenses.
00:02:02.079 --> 00:02:07.280
It looks like Revolute will be able to receive their banking license in 2027, which is huge news.
00:02:07.359 --> 00:02:20.800
I believe it's been only a few months when we first talked about their plans in America, and I believe one part of the discussion back then was they were looking to potentially acquire an American bank in order to get this license with ease, right?
00:02:20.879 --> 00:02:26.400
And now they are yeah, basically on track to receive a license on their own, which is huge news.
00:02:26.639 --> 00:02:32.240
What I also find interesting, Johnny, you know, Revolute, they've been struggling to get banking licenses for quite some time.
00:02:32.400 --> 00:02:38.080
And then within within 2026, it's it's I believe the third banking license they've received.
00:02:38.240 --> 00:02:46.800
They've just received the UK one, they've received their the Mexican one, if I'm not wrong, um, and now potentially the US one, at least the first steps to get it.
00:02:46.879 --> 00:02:50.159
The fact that this is now all coming at the same time is not random.
00:02:50.240 --> 00:02:56.879
I believe that's been the result of hard work, um, decades of hard work, of proper structuring, right?
00:02:57.120 --> 00:03:10.400
Um actually being, you know, having processes that matches the processes of a bank and not just a modern fintech startup because it yeah, does need some some different um yeah requirements, that's for sure.
00:03:10.719 --> 00:03:14.000
Yeah, I mean I I don't even know if I'd say decades, yeah.
00:03:14.080 --> 00:03:16.879
I mean, over the last couple of decades, they've really cleaned up their act.
00:03:16.960 --> 00:03:19.360
If you if you look back, sorry, even a decade.
00:03:19.520 --> 00:03:30.319
I mean, if you look back over sort of 2021 when BDO announced, or at least they had that awful, awful report where BDO said they couldn't account for nearly what, half a billion pounds of revenue?
00:03:30.400 --> 00:03:32.319
I think it was 450 million, maybe.
00:03:32.479 --> 00:03:37.919
That I think that was really probably one of the lowest moments in the history of Revolute.
00:03:38.400 --> 00:03:47.039
Um and was partly one of the reasons why they withdrew the application from California, which was their original attempt if you're unaware of the US.
00:03:47.199 --> 00:03:59.919
They applied for a state charter in California with FDIC insurance, and that didn't necessarily fail, but I think it was quite clear to them that they weren't going to get the license, Yan, so they pulled out.
00:04:00.080 --> 00:04:01.759
Or they pulled out.
00:04:02.000 --> 00:04:06.400
Someone's gonna say something about that.
00:04:06.639 --> 00:04:07.840
But you know what I mean.
00:04:08.000 --> 00:04:08.560
They withdrew.
00:04:08.800 --> 00:04:09.599
They withdrew.
00:04:09.840 --> 00:04:17.040
Um leaving what was a bit of a void because they hadn't really spoken about that license attempt at the time, Jan.
00:04:17.199 --> 00:04:25.439
And when it fell through, there was not much talk in the press or the the the at least from Revolute's perspective, they weren't really talking about it.
00:04:25.519 --> 00:04:26.879
They were quite hush-hush about it.
00:04:27.040 --> 00:04:29.439
That attempt, I think, was quite poorly executed.
00:04:29.519 --> 00:04:42.160
And it really comes down to, I think, this attempt, you know, really comes down to the execution process, going back to what Jan was saying about cleaning up their act, essentially putting things in place to be a more legitimate official looking entity.
00:04:42.319 --> 00:04:46.000
Having the UK banking license, Yan plays a big part in this, doesn't it?
00:04:46.160 --> 00:04:49.360
Like they that comes with a lot of legitimacy.
00:04:49.519 --> 00:04:53.279
The relationship between the Federal Reserve and the Bank of England, that's going to be extremely powerful.
00:04:53.360 --> 00:04:59.360
And I think that's gonna open up really the rest of the world to Revolution in terms of getting licenses in the future.
00:04:59.600 --> 00:05:02.560
What they have currently, I think, is quite interesting in the US Yan.
00:05:02.720 --> 00:05:10.240
I think that's something that we should quickly touch on for those that are unaware of their offering, because it is a lot thinner at the moment.
00:05:10.399 --> 00:05:17.279
And even though they haven't got uh their own charter or their own official license, they do operate through partner banks.
00:05:17.519 --> 00:05:23.120
Uh there's Sutton Bank, LEED, Lead Bank, and Crossriver.
00:05:23.279 --> 00:05:23.920
Is that right?
00:05:24.720 --> 00:05:25.040
That's right.
00:05:25.360 --> 00:05:42.800
Yeah, so they're operating in the US through a number of partner banks that allows them to offer certain products like credit cards, for example, but they're not able to capitalize on those, on, on the potential uh income that they could generate from those products because the partner banks have own the own the economics.
00:05:42.959 --> 00:05:45.360
So that's obviously a reason why they want to get licensed.
00:05:45.439 --> 00:05:47.360
But it does allow them to have certain products.
00:05:47.519 --> 00:05:49.360
The offering is very thin at the moment, though.
00:05:49.439 --> 00:05:52.079
There's the standard account, the premium account, the metal account.
00:05:52.160 --> 00:05:55.839
I think metal is 16.99 yen in the US, but it's thin.
00:05:56.000 --> 00:05:59.920
Like if we flick through the Revolut website for the US entity, it's very thin.
00:06:00.000 --> 00:06:01.519
There's not a huge amount happening there.
00:06:01.680 --> 00:06:11.759
They operate operate currently out of New York, they'll be moving to Stanford, Connecticut, with I think a goal to hire roughly 160 staff, or at least have 160 staff at launch.
00:06:12.000 --> 00:06:15.519
Um, they currently have a million active users?
00:06:16.480 --> 00:06:16.879
It's not bad.
00:06:17.759 --> 00:06:18.720
I'm curious.
00:06:18.879 --> 00:06:21.360
It's not bad, but I'm curious to get your thoughts on this.
00:06:21.439 --> 00:06:26.720
And particularly thoughts of anyone who's watching in the US at the moment, maybe you've used the Revolue product.
00:06:26.800 --> 00:06:27.519
What do you make of it?
00:06:27.680 --> 00:06:29.439
But just a million customers, Jan?
00:06:29.680 --> 00:06:32.959
Johnny, I I'm pretty sure they haven't really tried getting more customers.
00:06:33.040 --> 00:06:34.399
I think that was that's the whole point.
00:06:34.480 --> 00:06:38.639
I think this was more of an organic growth without a lot of marketing required.
00:06:38.720 --> 00:06:43.920
Obviously, they've they've done marketing that was also visible in the US as an example, or the Formula One team.
00:06:44.079 --> 00:06:45.839
Formula One is huge in in the US.
00:06:45.920 --> 00:06:50.639
I believe they're there, what's that, four races uh scheduled in the US, something like that.
00:06:50.800 --> 00:06:54.639
Um, and it's it's becoming just more popular every single year.
00:06:54.720 --> 00:06:56.720
Um so that gave them some visibility.
00:06:56.800 --> 00:07:00.959
But aside from that, was there a lot of marketing efforts in the US?
00:07:01.120 --> 00:07:01.920
Probably not.
00:07:02.000 --> 00:07:13.360
Um, and I think that's something that will change really, really quickly once they receive the actual banking license, once they are they have to go to onboard more American customers under their their own um entity.
00:07:13.519 --> 00:07:18.160
You'll quickly see them scale up from 1 million to 10 million and so on.
00:07:18.240 --> 00:07:20.079
I'm pretty sure it's just a natural process.
00:07:20.319 --> 00:07:23.839
Besides the marketing push, what can we expect that will be different?
00:07:24.079 --> 00:07:29.920
This episode is sponsored by no one really, just Jan and I and our website, depositscout.com.
00:07:30.079 --> 00:07:34.959
There you can go and track UK savings rates to find the best savings accounts available.
00:07:35.120 --> 00:07:44.240
We track easy access accounts, cash ICEs, fixed rates, notice accounts, junior ICEs if you have children, lifetime ICEs, stocks and shares ICEs.
00:07:44.399 --> 00:07:46.639
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00:07:46.800 --> 00:07:48.560
We also track switch offers as well.
00:07:48.800 --> 00:07:51.439
There's loads of features that I really like about Deposit Scout.
00:07:51.680 --> 00:07:53.279
Jan, do you want to just share one?
00:07:53.439 --> 00:07:54.319
What's your favorite?
00:07:54.560 --> 00:08:00.800
My favorite feature is the rate history graph, Johnny, because it quickly tells you which products are worth signing up for right now and which are not.
00:08:00.959 --> 00:08:06.000
As an example, etorus cash ICE offers 4.87%, which is the top of the table.
00:08:06.160 --> 00:08:12.639
But it's also, if we look at the rate history graph, the all-time high of whatever they've they've offered in the past, 4.8%.
00:08:13.040 --> 00:08:17.360
They've never offered so much in interest, and it's definitely a good option right now.
00:08:17.600 --> 00:08:23.279
The rate history graph allowed me to uncover this within a short time, and that's why I love it so much.
00:08:23.519 --> 00:08:25.600
So deposit scout.com is free to use.
00:08:25.839 --> 00:08:27.040
Link in the description box.
00:08:27.120 --> 00:08:28.240
We'll put it in the show notes.
00:08:28.399 --> 00:08:28.879
Check it out.
00:08:28.959 --> 00:08:31.120
It's the best way to support Jan and I.
00:08:31.279 --> 00:08:33.039
That's depositscout.com.
00:08:33.200 --> 00:08:33.840
Thank you very much.
00:08:34.080 --> 00:08:38.559
They have to launch this entity, this bank, by March 2028.
00:08:38.639 --> 00:08:41.039
Otherwise, the license application expires.
00:08:41.200 --> 00:08:43.200
That's an important nuance to remember, everyone.
00:08:43.279 --> 00:08:49.759
And that gives you an idea of the timeline here and when you can expect Revolute US, let's say the official Revolute US bank to launch.
00:08:49.919 --> 00:08:51.600
What can we expect that's gonna be that different?
00:08:51.759 --> 00:09:02.639
I mean, at the moment they're essentially a prepaid credit card or a prepaid debit card, I should say, with some multi-currency functionality, with some plans, and you know, I I don't know.
00:09:02.720 --> 00:09:04.480
I think you might be able to get personal loans.
00:09:04.559 --> 00:09:05.200
It's hard to tell.
00:09:05.440 --> 00:09:07.919
You know, what's gonna be hugely different to that though?
00:09:08.240 --> 00:09:08.720
You know, I can't.
00:09:08.960 --> 00:09:11.600
Johnny, I mean Port American It's gonna really besides the market.
00:09:14.720 --> 00:09:17.519
Just a different entity handling the um the account.
00:09:17.600 --> 00:09:19.120
Currently, there's deposit protection in place.
00:09:19.519 --> 00:09:23.600
Mate, that's supposed to entice people, that's supposed to get people in the door, and it's not gonna change.
00:09:23.759 --> 00:09:25.120
Yeah, that's the second part of the story.
00:09:25.200 --> 00:09:29.279
They obviously have to make their product more competitive in order to, especially on a credit card base.
00:09:29.440 --> 00:09:33.440
If you look at the credit cards, I think they're slightly underwhelming compared to what's available in the US.
00:09:33.600 --> 00:09:41.200
Um, you can get huge credit cashback cards there, um insane signup bonuses, hundreds of dollars potentially just for getting credit cards.
00:09:41.360 --> 00:09:43.840
And yeah, Americans love credit cards.
00:09:44.000 --> 00:09:44.399
Really?
00:09:44.559 --> 00:09:47.360
It's um there I think there are more credit cards than people over there.
00:09:47.759 --> 00:09:56.960
And in order for Revolute to compete with this already heavily saturated market, they really have to be be innovative, they have to do more than what they're doing right now, at least that's my opinion.
00:09:57.039 --> 00:10:05.360
So Americans, they might see more more features, you know, more enticing products being launched, but besides that, not a lot will change.
00:10:05.440 --> 00:10:08.799
I mean, the the the the deposit protection will be the same.
00:10:09.120 --> 00:10:21.200
Maybe that will entice customers though, saying, you know, your deposits are with Revolute Bank versus saying your deposits are with you know X bank in Minnesota that no one's heard of.
00:10:21.360 --> 00:10:25.679
You know, that might entice more deposits, that might help, you know, get more customers through the door.
00:10:26.240 --> 00:10:28.320
Potentially, but what's the actual difference, right?
00:10:28.399 --> 00:10:31.200
Uh the FDIC limit is£250,000.
00:10:31.600 --> 00:10:34.080
That's the deposit protection they have in America.
00:10:34.159 --> 00:10:45.679
Um, for listeners from UK that might not know that, and that's quite a large amount, and that will not change whether it's it's uh Lead Bank, Cross River Bank, Sutton Bank, or Revolut Bank that holds the money.
00:10:45.759 --> 00:10:47.039
That will not change.
00:10:47.200 --> 00:10:51.279
Um and therefore I don't see much, yeah, I don't see much of an argument here.
00:10:51.440 --> 00:10:55.759
Um I don't I don't think this will entice more American consumers to use Revolute.
00:10:55.840 --> 00:11:01.120
I think it's already really, really difficult market to succeed in, um, especially as European fintech.
00:11:01.279 --> 00:11:04.879
Right now, the you know political situations, the the news, right?
00:11:05.039 --> 00:11:07.679
It's seems slightly hostile.
00:11:08.240 --> 00:11:09.840
Seems like there's some frictions.
00:11:09.919 --> 00:11:20.000
I'm sure if you've you've watched the BBC or CNN or whatever news medium you follow, you'll you'll notice it's not easy for a European company to succeed in America nowadays.
00:11:20.080 --> 00:11:28.799
And I think American consumers, they're more skeptical than ever towards European companies coming in and trying to um explain them how to do their banking, right?
00:11:29.039 --> 00:11:32.720
And the market right now, uh it's it's hugely competitive.
00:11:32.799 --> 00:11:37.120
And I'm I'm thinking of one player in specific when I say that, and it's Chime.
00:11:37.440 --> 00:11:43.039
Chime is such an attractive um digital bank, um, almost too hard to beat.
00:11:43.120 --> 00:11:47.360
I don't know what Revolute can do in order to compete with this, but it's it's insane.
00:11:47.519 --> 00:11:53.200
Chime Prime, that's one one plan I want to mention, um, which is basically their top tier.
00:11:53.440 --> 00:11:58.559
Um, it's not paid, there's no monthly fee involved, but you get incredible benefits.
00:11:58.720 --> 00:12:10.559
As an example, two free launch visits per year, just like that, five percent cashback on up to fifteen hundred dollars worth of transactions in one category, it only requires three thousand dollars per month in deposits.
00:12:10.639 --> 00:12:11.679
It's insane, right?
00:12:11.840 --> 00:12:19.759
Getting five percent of cash back on fifteen hundred dollars and two free launch visits per year just for you know, just for using the account.
00:12:19.840 --> 00:12:21.360
I think that's fascinatingly good, right?
00:12:21.440 --> 00:12:28.879
In Revolute, they they also offer launch launch visits, obviously, unlimited launch visits of metal, but how many of those will you actually use in a year?
00:12:28.960 --> 00:12:32.960
You know, unless you're a frequent traveler, maybe maybe two, three, right?
00:12:33.039 --> 00:12:36.080
So it's it's not much of a difference, I would say, for the average American.
00:12:36.240 --> 00:12:38.320
And then they charge, how much is it for metal?
00:12:38.480 --> 00:12:39.360
$16.99?
00:12:39.440 --> 00:12:41.200
You know, that's a lot of money, right?
00:12:41.360 --> 00:12:43.919
Yeah, compared to a free product, it's almost as good.
00:12:44.080 --> 00:12:51.039
And if you look at the cashback benefit solely, it's most likely better even than what Revolute has to offer with the RevPoints.
00:12:51.440 --> 00:12:54.240
Better than Rev points that you have to pay to get the best.
00:12:54.879 --> 00:12:55.600
That's the thing, right?
00:12:55.759 --> 00:12:56.159
That's the thing.
00:12:56.240 --> 00:12:58.399
It really depends on the tier um which you're in.
00:12:58.720 --> 00:13:01.519
Which I would assume they can't afford to do in the US.
00:13:01.679 --> 00:13:02.720
That's an interesting thing to consider.
00:13:03.200 --> 00:13:04.559
I have to step up the game, that's for sure.
00:13:05.120 --> 00:13:12.480
Like notoriously competitive the credit card market is in the US and how important credit card interchange fees are going to be to Revolut.
00:13:12.799 --> 00:13:17.519
I can tell you now that credit cards are going to be everything for Revolut in the US market.
00:13:17.600 --> 00:13:22.480
And there's a very specific reason for that, at least because debit card interchange fees are capped.
00:13:22.639 --> 00:13:30.240
Any bank with over$10 billion in assets has the interchange fees capped at, I believe, 0.05%.
00:13:31.360 --> 00:13:36.159
So every time a customer swipes their debit card, then it's going to be a loss leader for Revolut.
00:13:36.399 --> 00:13:40.399
That's if they choose, Yan to hold over$10 billion in assets.
00:13:40.559 --> 00:13:43.519
Um, their partner banks specifically don't.
00:13:43.679 --> 00:13:45.120
They make sure they stay under.
00:13:45.200 --> 00:13:51.759
So, you know, the banks or the entities they partner with have more lucrative interchange fees, which is going to be very good for a bank like Chime.
00:13:52.000 --> 00:14:00.559
That's one of the reasons why they can subsidize such a great free account, Jan, because they've partnered with small banks that hold less than$10 billion in assets.
00:14:00.720 --> 00:14:02.720
So they're making a lot more on interchange.
00:14:02.799 --> 00:14:05.840
That's CIME, and that's how they can fund these fantastic free accounts.
00:14:06.080 --> 00:14:09.519
Appreciate the creativity to circumvent these regulations, Johnny.
00:14:09.919 --> 00:14:12.960
Yes, yes, they they're very creative in the ways that they do it.
00:14:13.120 --> 00:14:14.879
You know, some balance sheet manipulation.
00:14:15.120 --> 00:14:15.919
Oh, don't say that.
00:14:16.000 --> 00:14:17.440
Don't don't say manipulation.
00:14:17.600 --> 00:14:20.000
Restructuring, balance sheet restructuring.
00:14:20.639 --> 00:14:21.840
That sounds like a crime.
00:14:22.080 --> 00:14:22.240
Good.
00:14:22.639 --> 00:14:24.720
No one's committing a crime, it's all legal.
00:14:24.799 --> 00:14:26.159
Um just yeah, creativity.
00:14:26.399 --> 00:14:27.679
Yeah, no, no, Jan is right.
00:14:27.759 --> 00:14:28.320
Yan is right.
00:14:28.399 --> 00:14:31.679
And and Revolute will strive to be bigger than$10 billion in assets.
00:14:31.759 --> 00:14:37.519
So they're gonna they're gonna forgo the, they're gonna, they're not gonna be fussed by debit card interchange because they're not gonna be able to generate any fees from it.
00:14:37.600 --> 00:14:45.360
They're gonna want their customers to transact with credit cards, which means you can guarantee that the Revolute credit card in the US market is going to be favorable.
00:14:45.600 --> 00:14:47.279
It's gonna have a decent welcome bonus.
00:14:47.440 --> 00:14:58.080
But Yan, they can't possibly pay all 1 to 1.5 Rev points per dollar spent or like they do in the UK and Europe per pound per euro, can they, mate?
00:14:58.240 --> 00:15:07.440
They cannot ask customers to pay$16.99 to access a credit card that will be just about on par with the same earning rate as, say, the Amex Platinum, for example, in the US market.
00:15:07.919 --> 00:15:08.240
Not at all.
00:15:08.320 --> 00:15:08.639
Not at all.
00:15:08.879 --> 00:15:10.399
At least not with additional benefits.
00:15:10.639 --> 00:15:18.159
I mean, they can they can certainly ask for it, but I don't think American consumers will will find this very enticing and then um use this as a reason to switch.
00:15:18.559 --> 00:15:22.080
I think a credit card really needs to come with one thing, and that's actual cashback.
00:15:22.240 --> 00:15:26.240
Because the market is so competitive and there's so many competitors out there offering actual cashback.
00:15:26.320 --> 00:15:29.360
Um, even debit cards offering cashback, Chime Prime is an example.
00:15:29.519 --> 00:15:31.519
So you really gotta do something, right?
00:15:31.759 --> 00:15:42.559
You gotta you gotta bring in actual cashback, which is always more attractive than than receiving points and having to convert them afterwards, at least for me, and I'm sure for for other consumers as well, they'll think similarly.
00:15:42.720 --> 00:15:46.399
It's always a always a hassle to have to think about how to redeem points, you know.
00:15:46.480 --> 00:15:53.600
I'd much rather just have the money deposited to my account and I can use it when I when I buy groceries in the in the in the supermarket, you know.
00:15:53.840 --> 00:15:55.519
So this will be very, very interesting.
00:15:55.600 --> 00:16:00.480
And I think also one thing that's going to be very exciting, um, Nubank.
00:16:00.639 --> 00:16:03.440
They also received their banking license very, very recently.
00:16:03.759 --> 00:16:12.639
Nubank, that's this gigantic fintech um from Brazil originally, with I believe 127 million customers worldwide.
00:16:12.879 --> 00:16:19.279
And yeah, they're gonna they're gonna start in the US, probably launch at uh at roughly the same time than than Revolute.
00:16:19.600 --> 00:16:19.759
Possibly.
00:16:20.159 --> 00:16:26.559
Which is going to be yeah, possibly before, most likely before, actually, because they've received their conditional approval in January 2026.
00:16:26.639 --> 00:16:31.279
Um so most likely they'll they'll start relatively soon, I believe.
00:16:31.519 --> 00:16:39.200
And considering US population also has a you know, a lot of people have a um um what's it called?
00:16:39.360 --> 00:16:41.200
Um I know what you're about to say, yeah.
00:16:41.440 --> 00:16:48.720
You are you're talking about like the Spanish connection, the sort of South American, Central American connection of Newbank and North American.
00:16:48.960 --> 00:16:51.200
Yeah, a lot of you know a lot of I can see that relationship.
00:16:51.440 --> 00:16:57.279
Actually, a lot of US residents have a um have a background from from these countries, South American, Central American background potentially.
00:16:57.519 --> 00:16:58.000
It's a really good point.
00:16:58.240 --> 00:17:00.879
So they might feel more familiar with with Newbank, right?
00:17:00.960 --> 00:17:03.440
Maybe they have family over there that already uses Nubank.
00:17:03.519 --> 00:17:08.079
Nubank is live in in Brazil, um, Mexico and Colombia, I believe.
00:17:08.400 --> 00:17:14.880
So there will be families familiar with the product, and they will recommend that to the to the US family.
00:17:15.119 --> 00:17:22.400
And I think they'll have it a lot easier potentially than a British neobank launching that no one really knows over there.
00:17:22.720 --> 00:17:25.359
I think that's gonna be one of the hardest things for Revolut to get on with.
00:17:25.440 --> 00:17:32.240
I think you know a million customers might know who they are, but what percentage of the market doesn't know who Revolut are, regardless of the amount of marketing they've been doing?
00:17:32.400 --> 00:17:33.680
I think that's gonna be a huge challenge.
00:17:33.920 --> 00:17:35.279
You think this could go south, Johnny?
00:17:35.519 --> 00:17:37.200
I'd like to hear from other people in the comments.
00:17:37.359 --> 00:17:45.680
I mean, look, let's get through the episode first before we we we we kind of finalise our opinion, but at this stage, based on what we're saying, I'm not I'm not bullish.
00:17:45.759 --> 00:17:46.480
I I'm really not.
00:17:46.559 --> 00:17:48.960
I think they are taking on a huge challenge.
00:17:49.119 --> 00:17:51.759
I mean, let's just talk about the incumbents for a moment, man.
00:17:52.400 --> 00:17:53.200
What who have we got?
00:17:53.279 --> 00:17:56.799
We've got just a couple of big players or or or names that you may have heard of.
00:17:57.039 --> 00:18:10.160
Um JP Morgan, uh Chase, City, Bank of America, you know, people deposit their money with these uh providers because of reputation, because of uh history.
00:18:10.559 --> 00:18:12.160
Trust trust, thank you, mate.
00:18:12.240 --> 00:18:14.799
Revolute have n Revolute have some of that.
00:18:14.880 --> 00:18:15.839
I wouldn't say none of that.
00:18:15.920 --> 00:18:17.680
They do by all means have some of that.
00:18:17.920 --> 00:18:29.440
But to ask people to deposit large amounts of money into the account, I mean they're gonna have to offer some lucrative uh yield, uh high yield savings account, 100%.
00:18:30.480 --> 00:18:42.400
They're gonna I mean for them to succeed in America, Yan, they are going to have to bring a lot of money across and resource to invest in in gathering customers.
00:18:42.720 --> 00:18:48.480
The US market has the highest average acquisition cost for a person.
00:18:48.640 --> 00:18:50.640
Globally, the average is about$100.
00:18:51.200 --> 00:18:53.200
In the US, it's$300.
00:18:53.759 --> 00:18:59.359
Now, if you've got, you know, if you've got your site set on a million customers, oh well, it's not too bad, is it?
00:18:59.519 --> 00:19:09.200
But if you've got your site set on tens of millions of customers, well, that gives you an idea, Yan, of how much money you're talking that's needed to invest in this market.
00:19:09.359 --> 00:19:10.880
There's a lot on the line here, isn't there?
00:19:11.039 --> 00:19:16.400
And even just even just going back to Yan, what's going to happen when they transfer the existing customers across?
00:19:16.480 --> 00:19:24.559
And I don't know if anyone's familiar with this story, but back this this is quite important nuance, Jan, when you talk about how hard it can be to actually transfer customers across.
00:19:24.720 --> 00:19:36.880
Back in April 2018, TSB moved around 5 million customers off Lloyd's and onto a new platform that they'd built from like a I believe like a Spanish bank or they're they're like Spanish bank owners.
00:19:37.039 --> 00:19:39.680
Anyway, the whole thing went b went south.
00:19:39.920 --> 00:19:41.759
Customers were locked out for weeks.
00:19:42.000 --> 00:19:46.559
Um customers could even see, Yan, other accounts on the platform.
00:19:47.039 --> 00:19:50.000
So of course, like fraudsters just piled in.
00:19:50.160 --> 00:19:53.519
And I think in the in the end, it cost TSB about 330 million pounds.
00:19:53.599 --> 00:19:57.680
They were fined like 50 million pounds, they lost that their CEO quit.
00:19:57.920 --> 00:20:00.480
Um it was a disaster.
00:20:00.640 --> 00:20:02.079
It was an absolute disaster.
00:20:02.319 --> 00:20:06.559
And that just I that just tells you as well, like what could potentially go wrong for Revolut.
00:20:06.799 --> 00:20:08.160
I mean, could that happen to them, Jan?
00:20:08.559 --> 00:20:10.240
It might, it might, you know, we don't know.
00:20:10.319 --> 00:20:24.240
But um what we know for a fact is that Revolut has had transitions like these in the past, um, as an example ofin the EEA um when they were first licensed as an e-money institution and then trans um transferred the customers to this Lithuanian banking entity.
00:20:24.559 --> 00:20:26.640
Was probably a similar process, I assume.
00:20:26.799 --> 00:20:31.440
And then right now it's happening in the UK as they've just received their banking license over there.
00:20:31.599 --> 00:20:37.359
Um so I think they're probably more likely to succeed with this than uh a bank who has never done it.
00:20:37.519 --> 00:20:38.880
But it's fascinating to me, Johnny.
00:20:38.960 --> 00:20:41.759
I had no idea that these things could go wrong, even.
00:20:41.839 --> 00:20:45.599
Um, I thought it was literally just switching, yeah, switching a button and simple, doesn't it?
00:20:45.839 --> 00:20:50.079
Um yeah, having the customer transfer it over, but it seems to be more complicated than that.
00:20:50.400 --> 00:21:00.079
I really want to talk about for a moment as well, Jan, the the the US, the UK, European as well, fintechs that haven't made it in the US or have tried and failed.
00:21:00.319 --> 00:21:11.440
I think this is interesting context as well to really just say, look, Revolut have done something here that's actually quite impressive, but at the same time, it's really somewhat come down to timing.
00:21:11.599 --> 00:21:15.759
So Monzo, we're aware, most of us are aware, I'm sure.
00:21:16.000 --> 00:21:18.720
UK Bank, they did have a go at the US.
00:21:18.880 --> 00:21:23.519
They, I think, went in around 2020, 2021, but they were unsuccessful.
00:21:23.759 --> 00:21:27.839
Mainly due to problems with their own accounts at home.
00:21:28.079 --> 00:21:32.960
Um, weren't big enough, weren't strong enough, they just weren't ready for it essentially.
00:21:33.200 --> 00:21:36.559
A couple years later, they pull out, I think in 2025.
00:21:36.720 --> 00:21:39.359
They also got the license in Europe, the ECB license.
00:21:39.440 --> 00:21:43.279
And I think they just said, look, Europe looks more, more, more possible, more logical for us.
00:21:43.359 --> 00:21:44.160
That's where we're gonna go.
00:21:44.240 --> 00:21:47.039
But I think eventually you could see Monzo in the US.
00:21:47.359 --> 00:21:53.200
Wise, interestingly, also failed to get their license, although it was somewhat slightly different.
00:21:53.279 --> 00:21:58.960
They were looking for essentially just access to like the Federal Reserve's plumbing system for like sending money, yans.
00:21:59.200 --> 00:22:09.279
So instead of Using Wise's partner banks when money goes in and out of the US, they could take care of it themselves so that they could save money that way and transfers would be faster and more efficient.
00:22:09.519 --> 00:22:10.319
That makes sense.
00:22:10.480 --> 00:22:14.000
But then at that point, they also got hit with an anti-money laundering fine.
00:22:14.160 --> 00:22:16.319
Um and they failed as well.
00:22:16.400 --> 00:22:17.519
So they were unsuccessful.
00:22:17.680 --> 00:22:21.039
So that's another revolute competitor failing.
00:22:21.519 --> 00:22:23.519
And then there's Bunk, Jan.
00:22:23.839 --> 00:22:27.200
You might know more about Bunk than me being from Germany.
00:22:27.359 --> 00:22:29.200
Um, but they didn't make it as well, did they?
00:22:29.359 --> 00:22:30.480
Yeah, no, not really, Johnny.
00:22:30.559 --> 00:22:37.200
And there was actually very, very recently that they were refused August 4th, and the reason was that they could not show where the capital was coming from.
00:22:37.279 --> 00:22:40.559
Um, and they they changed the figure mid-application without explanation.
00:22:40.640 --> 00:22:41.759
There were some other issues.
00:22:41.839 --> 00:22:51.200
Um, as an example, the the chief executive that was supposed to handle the American arm um was yeah, supposed to work part-time from outside the country.
00:22:51.519 --> 00:22:57.759
Those are things that these these regulators uh those are things that these these regulators don't like.
00:22:57.920 --> 00:22:59.279
And it makes sense, right?
00:22:59.440 --> 00:23:04.799
Would you would you trust someone working part-time remotely from outside of your country?
00:23:04.960 --> 00:23:08.880
Um, would you trust someone like that to hold a banking license?
00:23:09.119 --> 00:23:09.920
They didn't even try.
00:23:10.079 --> 00:23:10.480
I don't know.
00:23:10.559 --> 00:23:12.400
And you always have to keep one thing in mind, right?
00:23:12.480 --> 00:23:15.839
When these entities fail, you know, who pays the bill?
00:23:16.079 --> 00:23:17.279
The government, right?
00:23:17.440 --> 00:23:25.039
The American government basically guaranteeing that these banks that they regulate and supervise that they won't fail, right?
00:23:25.200 --> 00:23:30.079
So it's it's a calculated decision that these these regulators make, and it makes total sense to me.
00:23:30.319 --> 00:23:34.400
I still think America is worth the trouble for all of these providers.
00:23:34.559 --> 00:23:36.400
If they can succeed there, it's going to be huge.
00:23:36.480 --> 00:23:38.000
And that's, I mean, for obvious reasons.
00:23:38.079 --> 00:23:39.839
It's such a big country, first of all.
00:23:40.000 --> 00:23:48.400
And then also the the fact that um that American banking environment seems to be a little bit less digital than it is in the in the UK at least.
00:23:48.480 --> 00:23:50.720
Um that's my outsider's perspective.
00:23:50.880 --> 00:23:58.880
As an example, numbers of checks written, we have 9.2 billion in the United States in 2024, and only 91 million in the UK.
00:23:59.119 --> 00:24:06.240
Not sure how many were written in the U in Germany or in other European countries, um, probably even less, but it's very, very fascinating, right?
00:24:06.319 --> 00:24:08.160
So there's a lot to to digitize.
00:24:08.400 --> 00:24:16.000
Also, um, instant payments, only 344 million instant rate uh payments in the US made in 2024.
00:24:16.160 --> 00:24:18.960
I believe 5.6 billion in the UK.
00:24:19.039 --> 00:24:21.119
So that's uh very, very fascinating, Johnny.
00:24:21.200 --> 00:24:23.119
That's a gigantic country, biggest economy in the world.
00:24:23.200 --> 00:24:23.759
Yeah, right?
00:24:23.839 --> 00:24:26.799
If you succeed over there, yeah, you've made it, literally.
00:24:26.960 --> 00:24:32.319
You can for Revolut, this would mean they could live up to their gigantic valuation, right?
00:24:32.400 --> 00:24:36.240
It would mean you know, a lot of investors being satisfied.
00:24:36.319 --> 00:24:38.079
So it's it's hugely important for them.
00:24:38.160 --> 00:24:43.680
It's maybe the most important market to succeed in, yeah, I would say, but also the most challenging at the same time.
00:24:43.759 --> 00:24:55.680
But I do think there is space in the market, even though it is very saturated for expats, migrants, I think multi-currency people that hold multiple currencies in their accounts.
00:24:55.839 --> 00:24:57.279
I think there is space for revolution.
00:24:57.519 --> 00:25:10.720
The all-in-one super app is something that look, I'm not American, I I can't speak to this, but I know in the UK it's not something that people necessarily want, like they might have in China, for example, or in Asia.
00:25:10.880 --> 00:25:18.720
I'm curious to hear from people in the comments if you care for that, if you want to have all of your banking in one place, because right now, yeah, that doesn't really exist.
00:25:18.880 --> 00:25:26.319
Revolute could bring an all-in-one super wealth app to the US market, but yeah, do people in the States want that?
00:25:26.799 --> 00:25:27.839
Great question, Johnny.
00:25:28.079 --> 00:25:30.640
Anyone listening from the States, please write into the comments.
00:25:30.799 --> 00:25:32.160
Would love your perspective on this.
00:25:32.559 --> 00:25:34.000
Um, I personally don't think so.
00:25:34.079 --> 00:25:40.319
I think um a lot of people in America are skeptical towards super apps, and there's not a really I mean it doesn't exist right now.
00:25:40.480 --> 00:25:44.880
There's not not one super app existing as it does in in China, for example.
00:25:45.039 --> 00:25:47.039
Um, so I think it's yeah, it's difficult.
00:25:47.200 --> 00:25:51.039
Also, as a consumer, you personally, Johnny, would you want something like that?
00:25:51.279 --> 00:25:54.160
At least I know for myself, I'm good without it.
00:25:54.240 --> 00:26:03.839
I like my bank to to handle all banking-related topics for me, and I like my insurance to handle all insurance-related topics for me, and yeah, and so on, right?
00:26:03.920 --> 00:26:07.279
I don't need my my bank to provide a mobile plan all of a sudden.
00:26:07.440 --> 00:26:08.400
It's not needed, right?
00:26:08.480 --> 00:26:10.160
I'm I'm fine with my normal mobile plan.
00:26:10.400 --> 00:26:13.839
It might be a novelty to Americans, something new to try.
00:26:14.000 --> 00:26:15.599
That might be quite exciting.
00:26:15.680 --> 00:26:21.359
I I do think that one of the biggest plays that Revolute will make in the US will be the subscription platform.
00:26:21.440 --> 00:26:25.279
I think they will launch potentially Ultra.
00:26:25.440 --> 00:26:35.519
They will make a deeper, more valuable platform, or sorry, plan, I should say, um, to try to entice people to sign up and then bring across deposits.
00:26:35.839 --> 00:26:39.039
Like they've got to find a way to entice deposits ultimately.
00:26:39.119 --> 00:26:46.079
And having Ultra with uh different subscriptions, different products, so you can capture different people.
00:26:46.400 --> 00:26:48.880
That then might be a way to entice deposits.
00:26:49.039 --> 00:26:52.720
High yield savings will be very important for them in order to do that as well.
00:26:52.799 --> 00:26:54.559
Um and that's how they'll compete, I think.
00:26:54.799 --> 00:26:57.599
I I'm really at this point of the episode.
00:26:57.680 --> 00:27:04.160
I I'm you know, I'm I'm still I'm still not sure, Jan, about how they can succeed in the US in the market.
00:27:04.559 --> 00:27:05.599
Maybe they'll show us, Johnny.
00:27:05.839 --> 00:27:07.119
You know, maybe they would show us.
00:27:07.440 --> 00:27:07.920
I hope so.
00:27:08.240 --> 00:27:12.480
Maybe for us it's just a matter of of leaning back and watching the spectacle happen.
00:27:12.640 --> 00:27:14.960
Um I think they will they will surely try their very best.
00:27:15.039 --> 00:27:16.400
They have deep pocket, Johnny.
00:27:16.640 --> 00:27:21.119
Um, they're the the second biggest private uh fintech in the world, I believe.
00:27:21.200 --> 00:27:22.559
Um just saw that on LinkedIn.
00:27:22.640 --> 00:27:23.599
It's it's fascinating.
00:27:23.680 --> 00:27:25.440
So if they won't succeed, who will?
00:27:25.599 --> 00:27:26.400
That's the thing.
00:27:26.559 --> 00:27:33.920
And that makes me, you know, confident that they will they will manage this um this challenging market entry and they will succeed over there.
00:27:34.160 --> 00:27:37.920
Get in the comments, let us know your thoughts, you know, what we've talked about today.
00:27:38.079 --> 00:27:38.960
What do you think?
00:27:39.119 --> 00:27:40.960
Will Revolute be able to succeed?
00:27:41.200 --> 00:27:45.920
Based on your experience, if you're American, of you know the banking sector.
00:27:46.079 --> 00:27:48.720
Are you excited to see Revolute entering the market?
00:27:48.960 --> 00:27:53.680
Do you hold any negative sentiment towards Revolut because they're European?
00:27:54.000 --> 00:27:54.559
Me too.
00:27:54.720 --> 00:27:55.279
Very interesting.
00:27:55.519 --> 00:27:57.359
Please join our Discord if you haven't already.
00:27:57.519 --> 00:27:59.839
A lot of exciting conversations happening over there as well.
00:27:59.920 --> 00:28:01.119
We're gonna show something on the screen.
00:28:01.279 --> 00:28:03.519
I'm gonna also put a link in the description below.
00:28:03.680 --> 00:28:05.759
And um, yeah, see you in the next episode.
00:28:05.839 --> 00:28:06.240
Goodbye.
