The London-based challenger bank Revolut bounced back strongly after experiencing massive losses during the first half of the year, thanks to substantial growth in user base and revenue.
The digital bank says its revenue fell 40% early in 2020. Still, the business rebounded sharply in the past few quarters, helping reach a breakeven level in November for the second time in history, according to Nik Storonsky, Revolut’s CEO and co-founder.
“We’re now actually 50% ahead in terms of revenues compared to pre-Covid levels,” Storonsky said. “Gross margins increased significantly as well. In terms of financials, we broke even in November, and we’re doing much better compared to pre-Covid times,” he added.
Revolut, which has more than 13 million retail banking users and 500,000 business customers, says the sustainable profitability depends on how fast the bank wants to grow.
Challenging market conditions
For fiscal 2019, the challenger bank posted a hefty loss of £106.5 million despite tripling revenues year over year.
Meanwhile, several other challenger banks, including Monzo, struggled in the past years due to a lack of profitability.
Revolut’s strategy of expanding its product offerings and revenue base allowed it to break even in 2020 despite challenging market conditions.
“We have many revenue lines because we are a very well-diversified payments business,” Storonsky said.
The company’s strategy of introducing cryptocurrency trading and enhancing the cross broader payment system added to revenue growth in 2020.
After capitalizing on a significant market share in the European markets, the financial services company now targets the United States market. In H1 2020, the company launched its digital bank services in the US. Hence, Americans now have the possibility to spend and transfer money in a fast and easy way with Revolut’s app.
Revolut is working with Metropolitan Commercial Bank in the United States for the banking infrastructure with FDIC insured deposits.