4 ms·
It feels like they are going the traditional bank route, give away a basic product and charge fees for everything over a threshold. Looking at their business p
by jermaustin1 7y ago
It feels like they are going the traditional bank route, give away a basic product and charge fees for everything over a threshold.
Looking at their business pricing page, it looks like they are going to get into commercial lending, which could prove profitable. I don't know if it is VC-scale, though.
Most big, successful banks that have withstood the test of time have grown VERY slowly over nearly 200 years and acquired a lot of local banks along the way.
I don't recall all of the numbers but my brother (a small-town-bank vp) told me not that long ago that most small town banks will profit between $1M and $5M per year (5-10% return on equity). A small bank will usually have a few thousand customers.
So if Revolut has 10M customers (2000x bigger than a small town bank), and the customers are using Revolut like they would their small town banks, they should be profitable at some point.
- cosmodisk 7y agoIt's one thing to get high growth among millennials with a shiny app and completely another to get into commercial banking.The reason why majority of the banks rather do mortgage and some other 'easier' products is because of how difficult and complex commercial lending is. I don't think it's fair to compare a local town bank in the US to challenger bank in Europe. I suspect a very high percentage of revolut accounts were opened purely to support alternative banking, however these customers aren't and won't be the ones that will bring fortunes to the bank's coffers.
- jermaustin1 7y agoI agree, which is why I'm saying that I don't think that Revolut can be a VC-scale commercial bank. But I do believe it will be profitable if they can convince their users to use it as an actual bank, and not just a novelty app and debit card.