The UK’s fastest-growing financial technology company has started the process of applying for a licence in Luxembourg to cope with the potential disruption of Brexit. Revolut, the digital payments company that has almost tripled its customers to 2.8m in a year, plans to set up an office in Luxembourg and is in talks with the country’s regulators about how many staff it needs there.
“It takes us six months to get an e-money licence and so we have applied for one in Luxembourg – just to be on the safe side,” said Nikolay Storonsky, the Russian-born co-founder and chief executive of Revolut. The British government has promised to defend Britain’s position as a global fintech hub.
However, some executives in the sector have warned that Brexit could undermine its attractiveness, especially if it technology specialists become harder to hire in the UK. Mr Storonsky said he had no plans to leave London, adding “I love it here”. But he predicted the UK capital would fade as a financial centre because “more banks will cut back as they make less money, they are squeezed by regulation and face competition from fintechs”. Revolut met UK regulators last year about applying for a banking licence but instead it decided to apply for one in Lithuania, partly to avoid the disruption of Brexit.
Mr Storonsky, who created the company in 2015 after working for Lehman Brothers and Credit Suisse, said he expected Lithuania to grant its banking licence next month. But he added that it could still be many months before the company secured the necessary authorisations in each EU country to “passport” from Lithuania across the rest of the bloc. Revolut launched three years ago in a crowded field of British pre-paid card operators seeking to disrupt traditional banks by offering cheap cross-border payments. It quickly diversified into cryptocurrencies, insurance and small-business services and earlier this year it raised $250m from investors that valued it at $1.7bn.
According to its recently filed annual report, the company’s revenues increased more than fivefold to £12.8m last year, while its pre-tax losses more than doubled to £14.8m. Its net cash generated from operating activities was a negative £33.3m last year, but Mr Storonsky said it started to break even on a monthly operational basis earlier this year. Mr Storonsky said Revolut “has shown no signs of slowing down” and it now has close to 3m users who do $3bn of transactions a month. He predicted its revenues would quadruple this year after it signed up 80,000 people for its new metal card, offering extra services such as travel insurance and additional cash withdrawals for £12.99 a month.
This week, Mr Storonsky will visit Tokyo to announce plans for launching its services there later this year, which could make Japan its first Asian market. The company also plans to expand in the US, Canada, Australia, New Zealand, Singapore and Hong Kong. Revolut employs more than 500 people, many in support and technology roles in Poland and Russia. It recently moved out of the Level 39 start-up accelerator in London’s Canary Wharf into its own offices a few streets away and plans to open another support centre in Europe.
Source: ft.com