Revolut results in 2023. How many customers did this fintech take away from banks?

Revolut results for 2023 are here. As usual, and with a significant delay (albeit less than in previous years), Revolut – Europe’s largest fintech company – has announced its audited results for last year. The company, in which investors have invested more than €2 billion over the past eight years, is already present in 38 countries and has finally started to make a noticeable profit. In terms of the number of clients, we will soon compare it to the largest global banks. It has 3.5 million customers in Poland. And – as I estimated – there is a noticeable group of those who treat Revolut as their primary bank.

Many customers (and non-customers) still perceive Revolut as a holiday app for payments without foreign exchange spreads, but it has long outgrown this role. It must be objectively recognized that it is a great success for its creators (Ukrainian Vlad Yatsenko and Russian Nik Storoski, I wrote about their biography and the basics of creating Revolut here) and the London investors who financed the project.

We know the results of Revolut in 2023. There are profits

Many fintechs have failed to break out of the holiday app role, while most banks have already introduced zero-deposit cards and online currency exchanges in the app. In addition, high interest rates have made raising capital more expensive, and donors of capital have begun to expect profits from the fintechs they fund. This is a problem, because people come to fintechs because they are free in the first place. As such, few fintechs have been able to make a serious impact on banks.

So far, Revolut has managed to “jump over the fence”: get a banking license and expand its range of services to include loans, credit cards, savings accounts and safes (the ability to save on the remainder), youth and children’s versions of the Revolut app (which made it possible to position itself as a “family bank” “”), a loyalty program, an investment platform for ETFs, stocks and cryptocurrencies, and even a hotel booking platform (Revolut Stays) and its own payment system, Revolut Pays.

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In addition, there were strong investments in entering new markets (today Revolut has customers in 38 countries). And every time it seemed that Revolut would finally start making money in the markets where it has been operating for several years, the company announced an expansion that would return it financially “underwater”, or at least close to zero. In total, Revolut received €2.5 billion in funding over eight years, of which it “burned” about €350 million (I convert from pounds at current rates, sorry for any inaccuracies). But I think the harvest will finally come.

Revolut just announced that it has nearly doubled its revenue to €2.12 billion in 2023. Finally, it made money that you don’t need to look at under a magnifying glass. The company’s pre-tax profit amounted to 516 million euros, which is more than 2.2 billion Polish zlotys (in the previous year there was a symbolic gross profit of 7 million euros). Net profit – equivalent to 405 million eurosThis represents a quarter of the net profit of Bank Pekał, the most profitable financial institution in the Polish banking market.

Revolut reports that it has 38 million customers who made 590 million different types of transactions in December 2023. (Probably mainly payments and currency exchange at the Revolut office.) Probably a significant part of these transactions is carried out in the “core” market of Revolut, namely in Great Britain (there, the company has always had the most loyal and paying customers, and is already a real competitor to large banks).

If we assume that an active customer – who deals with a particular financial company as their primary banking instrument – is someone who makes one card transaction per day, then – based on the figures provided by the company – it can be assumed that approximately a third or one quarter of Revolut customers meet this requirement. For these 25-30% of customers, Revolut is the bank of first choice or at least the “swing” option (between the first and second place of the bank).

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How does Revolut make money?

How does Revolut make money? Revenue from card issuance fees and card transactions amounted to more than €570 million, the company had €579 million in revenue from currency exchange (Revolut counts it with real estate products, i.e. – I assume – brokerage in managing clients’ money invested in various assets). And on subscriptions to its more expensive and paid service packages – €287 million. This is good – you can see that the company has become independent of currency differences as a major source of income (this is the Achilles heel of many fintech companies).

This last number means that The company gets 7.5 euros of annual revenue per client from “account maintenance fees”. (Of course, excluding spreads and interchange fees on card transactions.) At the same time, it turns out that – even taking into account the company’s expansion (in new markets, it takes time to “acquaint” customers with paid options) – it is still not a “banking” business model, based on account revenue and card fees.

Revolut makes money primarily from the fact that it has a lot of customers paying with its cards (it “takes” a commission or currency from each payment). And also because it allows its customers to invest money (acting as an intermediary, being a de facto front for brokerage firms and investment platforms).

Revolut reported that at the end of December, customers had deposited the equivalent of €15.5 billion into its accounts. (That is, PLN 65 billion – a value comparable to the deposit portfolios of banks in the Polish banking first league.) However, Polish banks have several million customers, not 38 million. For each Revolut app customer, this “deposit” amount is just over EUR 400. This is another sign that Revolut is still – in terms of its business model – closer to an “almost bank” than a full-fledged bank.

What do Revolut’s 2023 results say about the Polish customer?

Revolut has provided more information about its operations in Poland for the first time. The Fintech has 3.5 million customers here (half a million of whom joined this year when the company started spending money on marketing). – Their ads can often be found online). It is not known how many of them have active customers (Revolut has not shared this data, which means that it is not yet satisfactory for them, they only wrote that this number increased by 50% last year).

Revolut says it has Polish customers made 172 million transactions annually. (excluding currency exchange, and card use only), which gives some 57 transactions per customer. This is three times less than the average number of transactions per customer across all countries where Revolut operates. It can be estimated based on these bits of data that (just? as much?) One in six Revolut customers in Poland use fintech as their primary place of banking (Probably most of them are young people for whom Revolut is simply a better bank than others.)

The fact that Revolut is slowly moving beyond the function of a “holiday” app and is beginning to be treated – at least by some customers – as a primary payment tool is also evident from the fact that 60% of all Revolut card transactions are classified as domestic. This means they weren’t aiming to avoid spreading when travelling abroad. Assuming that 500,000 Revolut customers in Poland treat the app as their primary banking tool, their 100 million domestic transactions would amount to 200 transactions per person per year.

Fintech also provided another interesting figure – that Polish Revolut customers deposited nearly PLN 3.9 billion into their accounts at the end of last year (A year ago it was PLN 2.5 billion.) That amounts to around PLN 1,300 per average customer, which is not insignificant, especially since Revolut can make money on this money. Some of this money is likely to be savings in “vaults,” i.e. savings accounts, and some in foreign currency sub-accounts.

By the end of the year, Revolut wants to have nearly 4 million customers in Poland.Which means that less than 10% of all its customers will be Polish. In the first half of the year, Revolut gained half a million customers, and in the second half of the year it will be helped by Julia Wieniawa, who will be the brand ambassador for the next few months and will promote it in the marketing campaign and on its social media.

Will Revolut have 50 million customers in 2025?

Revolut wants to have 50 million customers worldwide by the end of the year, which would make the fintech bank a major pan-European player. Banks like ING, Barclays or HSBC have 40-50 million customers, while the biggest European banks – BNP Paribas, Spain’s BBVA or Santander – have 70-80 million. The other thing is that these customers have much bigger “calories” and these banks can earn more from them in a multifaceted way (asset management, mortgages, investment loans, bancassurance) than Revolut can from its customers.

Revolut’s 2023 results are down to product innovations. Fintech comes up with something interesting or innovative every year. This year, such novelties – which you can read about in “Myself about finance” – are robo-advisor services (in Revolut you can easily put together a portfolio of global ETFs) and eSIM cards, useful for exotic trips, which can be “inserted” to a smartphone directly from the Revolut app (allowing you to avoid high roaming fees outside the EU).

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Maciej Samsik recommends:

The partner of “Subiektywnie o Finansach” is BNP Paribas Bank Polska, which offers a full range of great holiday solutions. Its basis is the debit card – Openness to the Global Compactfor which we pay 12 zlotys per month, but in return we get a package of financial services useful for traveling around the world.

Above all Currency conversion for transactions in about 180 currencies at the payment institution’s exchange rate without bank commission. So we got a non-commercial debit card. This is what they came up with. Free Euro withdrawals from EEA ATMs (i.e. the European Union plus Norway, Iceland and Liechtenstein), Free withdrawals in any currency from Global Alliance or BNP Paribas Group ATMsA fee of PLN 7 for withdrawals from other ATMs outside Poland.

In addition, cardholders can: Free trip cancellation insuranceWe can insure up to 5 people in one account for up to PLN 40,000 per person. There is one condition – the payments we insure must be made either using the Open to the World card or by transfer from an account linked to it. The scope of insurance includes reimbursement for cancelled accommodation reservations, cancellation of a tourist event and a flight ticket due to circumstances covered by the insurance.

In addition to the non-prevalent card (open to the global card), BNP Parobas Bank Polska also offers: Multi-currency holiday service In the narrow sense of Multi-Currency MasterCard (Using this card, we can, for example, buy euros in the spring and pay with this currency “stored” in our foreign currency account during the holidays in July and August.)

I also recommend one of the Luxury Credit Cards from BNP Paribas Bank Polskawith which you will spend your vacation with additional amenities: free credit and travel insurance, access to airport lounges, concierge, fast track and slow life. It’s a carefree vacation with a luxury credit card. More about BNP Paribas Bank Polska credit cards – Gold and Platinum – here.

Cover Image: Revolut