Revolut Now Have 500,000 Irish Customers. Update: 1m customers now.

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Often the lack of competition in the Irish banking market is discussed.

In that content, I think Revolut reaching 500,000 Irish customers, should be celebrated.

Traditional common perception of the Irish banking market: Current account competition is non-existent, banking is a closed market and banking inertia is huge.

Revolut are proving that this perception is no longer reality.

Revolut (and to a lesser extent N26 and others) are proving serious competition for the incumbents in terms of payments, FX and increasingly in the current account sphere.

Well done Revolut for such impressive growth and helping break the hold, of the traditional banks, on the Irish banking market.
 
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I came back to Ireland in 2018 after leaving in 2008 and I was shocked that BOI online interface was the same! I'd hazard a guess that Revolut have released more features in the last 6 months than BOI have in 10 years.

I have been very impressed with Revolut, high street banks are in real trouble.
 
I am not sure that the banks make much if any profit on current accounts.

They do make it on FX transactions, so I suppose Revolut might affect them there a bit.

But they make most of their money on lending, and mortgages in particular.

Isn't Revolut hugely loss making? I don't know much about their business model, but it does not look sustainable to me.

Brendan
 
Gordon Gekko said:
One of the biggest commodities now is data...just imagine the data they are harvesting
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Brendan Burgess said:
I am not sure that the banks make much if any profit on current accounts.

They do make it on FX transactions, so I suppose Revolut might affect them there a bit.

But they make most of their money on lending, and mortgages in particular.

Isn't Revolut hugely loss making? I don't know much about their business model, but it does not look sustainable to me.

Brendan
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We live in a funny world, look at Uber, WeWork, Peloton they are all loss making but yet they are used by millions. The aim of the game seems to be get as many users as possible and then work on profitability. Regarding banks profitability, the retail customers are only there for the deposits that can be leveraged, but since ring-fencing in the UK this is less of a necessity.

Banks are in big trouble on the retail side. I am in my early 30's and I opened, my bank account was opened by mother with BOI because it was a recognizable brand on the high street. Young people now have no brand connection with a bank, and the especially have a low tolerance for poor technology. Revolut with 500k customers is showing that people are trending away.

After all a lot of posts on AAM have been about how the banks have screwed people over!
 
Brendan Burgess said:
I am not sure that the banks make much if any profit on current accounts.

They do make it on FX transactions, so I suppose Revolut might affect them there a bit.

But they make most of their money on lending, and mortgages in particular.

Isn't Revolut hugely loss making? I don't know much about their business model, but it does not look sustainable to me.

Brendan
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Correct. Also credit cards.

Also, with all of these alternatives (and I'll include PayPal, ApplePay, GooglePay or other customer facing payment tools) - exactly who's infrastructure do you think they are using? They are all using the existing infrastructure that the financial institutions built and own. What has happened is that the likes of Revolut still process their bulk activity through the banks. All they have done is removed some of the small individual transactions from the bank ledgers and switched it to larger bulk transactions.

The large banks (I'm not thinking of BoI, AIB etc) are not threatened by services such as Revolut - they may have other concerns.
 
EmmDee said:
The large banks (I'm not thinking of BoI, AIB etc) are not threatened by services such as Revolut - they may have other concerns.
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I am not sure this is the case. Revolut are following the classic IT start-up model of build a huge customer base first, then offer profitable services.

In time they will offer consumer credit. Mortgage and SME lending is a long way off, but I wouldn't rule it out eventually.

Revolut and N26 (if they don't collapse in the meantime) will put in place their own banking infrastructure eventually. Regulators and investors will insist upon it if they get big enough.
 
NoRegretsCoyote said:
Revolut and N26 (if they don't collapse in the meantime) will put in place their own banking infrastructure eventually. Regulators and investors will insist upon it if they get big enough.
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I think you misunderstand what I meant (or I wasn't clear) - yes they will have their own infrastructure / platforms. But they won't have their own global payments infrastructure - they will sit on what's available. As do most banks and financial institutions. Whether it's SWIFT, Fedwire, ACH or various other core infrastructure, they will plug into them. Even the replacements to these are not owned by the start ups, they are funded by the large processing banks & institutions - JPM, Citi, BofA, Visa, etc - whether individually or in consortiums. Think of them as large global utilities. The likes of Revolut will plug into these and look to eventually be profitable by having enough customers that internal switches (from one Revolut customer to another) allow them reduce cost to service.

Revolut and N26 will never (well - for the foreseeable future) be of a scale where they could think about funding a global payments infrastructure and then persuade other participants to use it (which they would need).

An analogy (though somewhat poor) is a mobile service reseller. They can sell you a service and buy wholesale from the utility providers. But there is no way they would have the scale to build their own masts, buy their own bandwidth and run their own tech infrastructure and have a comparable service. The investment scale required in international payments is much wider than that
 
EmmDee said:
I think you misunderstand what I meant (or I wasn't clear) - yes they will have their own infrastructure / platforms. But they won't have their own global payments infrastructure - they will sit on what's available. As do most banks and financial institutions. Whether it's SWIFT, Fedwire, ACH or various other core infrastructure, they will plug into them. Even the replacements to these are not owned by the start ups, they are funded by the large processing banks & institutions - JPM, Citi, BofA, Visa, etc - whether individually or in consortiums. Think of them as large global utilities. The likes of Revolut will plug into these and look to eventually be profitable by having enough customers that internal switches (from one Revolut customer to another) allow them reduce cost to service.

Revolut and N26 will never (well - for the foreseeable future) be of a scale where they could think about funding a global payments infrastructure and then persuade other participants to use it (which they would need).

An analogy (though somewhat poor) is a mobile service reseller. They can sell you a service and buy wholesale from the utility providers. But there is no way they would have the scale to build their own masts, buy their own bandwidth and run their own tech infrastructure and have a comparable service. The investment scale required in international payments is much wider than that
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I do note that Deutsche got slapped on the wrists for the amount of payments that failed in the CHAPS system recently.
 
The thing is though that it's not really a competitor for current accounts, nearly all users I know (myself included) use Revolut to supplement their current account, not to replace it.
 
CiaranT said:
Revolut (and to a lesser extent N26 and others) are proving serious competition for the incumbents in terms of payments, FX and increasingly in the current account sphere.

Well done Revolut for such impressive growth and helping break the hold, of the traditional banks, on the Irish banking market.
Click to expand...
Once I'm confident these guys are here to stay I will be very happy to move away from traditional banking. I've one child who had endless trouble trying to open a normal bank account in the UK and gave up and opened a Monzo account. And now I'm by passing my banks, Ireland and abroad to use Transferwise to do my currency transactions. I can transfer money in less than an hour from one country to another. It's unbelievably amazing. I was shocked. When I do bank to bank transfers Ireland/abroad it takes a couple of days. Which I though could not be avoided.

Also I'm not impressed with my last outings into bank branches of two of the main Irish banks. Young people dressed like they were down the disco, no privacy, and zero customer service attitude. In fact the attitude was why are you bothering me. And the bank branches look like I was in somwhere like McDonalds, only no bad smell.
 
That seems to be their main problem at the moment. To convince more customers to make this their main current account they would need to be part of a confidence-inspiring deposit insurance scheme. Picking Lithuania doesn't seem to do the trick, especially since competitor N26 is part of a rock-solid German insurance scheme and regulatory regime.
 
I use N26 and Revolut. I feel somewhat more secure with N26 because it is an actual bank, atho I understand Revolut lodges money with Barclays and therefore benefits (or the customer benefits) from UK gov.t guarantees.
 
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Bronte said:
Once I'm confident these guys are here to stay I will be very happy to move away from traditional banking. I've one child who had endless trouble trying to open a normal bank account in the UK and gave up and opened a Monzo account. And now I'm by passing my banks, Ireland and abroad to use Transferwise to do my currency transactions. I can transfer money in less than an hour from one country to another. It's unbelievably amazing. I was shocked. When I do bank to bank transfers Ireland/abroad it takes a couple of days. Which I though could not be avoided.

Also I'm not impressed with my last outings into bank branches of two of the main Irish banks. Young people dressed like they were down the disco, no privacy, and zero customer service attitude. In fact the attitude was why are you bothering me. And the bank branches look like I was in somwhere like McDonalds, only no bad smell.
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I had a US $ check that needed lodging. The option from BOI was to use a regular deposit slip and scribble out the EUR and write Dollars. When inquired about the rate, I was told "It will be decided once it gets to the FX back office team". That exposed me to price risk, but unfortunately the only option available at that time.

I understand that lodging non Eur checks is part of everyday banking in Ireland but given BOI advertised themselves as "Returning to Ireland? Come bank with us" and the amount of Irish citizens working abroad it is pretty poor in my opinion.
 
horusd said:
I use N26 and Revolut. I feel somewhat more secure with N26 because it is an actual bank, atho I understand Revolut lodges money with Barclays and therefore benefits (or the customer benefits) from UK gov.t guarantees.
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Emmm - I'm not sure that can be fully accurate. If Revolut holds client money at Barclays, it will be seen as a single customer and therefore each underlying Revolut customer would not be covered by the UK scheme - only Revolut up to the max for a single person. Unless they open individual accounts for each customer in that customers name (or identifying each customer) which I doubt if I'm honest.
 
EmmDee said:
But they won't have their own global payments infrastructure - they will sit on what's available. As do most banks and financial institutions. Whether it's SWIFT, Fedwire, ACH or various other core infrastructure, they will plug into them. Even the replacements to these are not owned by the start ups, they are funded by the large processing banks & institutions - JPM, Citi, BofA, Visa, etc - whether individually or in consortiums.
Click to expand...
I'd imagine that not having their own infrastructure and being able to plug in to existing infrastructure is what gives them their advantage. They come to the industry with a clean sheet whereas the systems of incumbent banks are almost falling over - caught up with endless compliance. They can't update their systems as they're unwieldy.

Whilst SWIFT is owned by the banking set, Ripple is emerging and provides an alternative.

Traditional banking isn't trusted like it was with previous generations. Millenials don't trust them and combined with that generations comfort in working digitally, there's going to be an ongoing move away from incumbent banks.
 
CiaranT said:
Often the lack of competition in the Irish banking market is discussed.

In that content, I think Revolut reaching 500,000 Irish customers, should be celebrated.

Traditional common perception of the Irish banking market: Current account competition is non-existent, banking is a closed market and banking inertia is huge.

Revolut are proving that this perception is no longer reality.

Revolut (and to a lesser extent N26 and others) are proving serious competition for the incumbents in terms of payments, FX and increasingly in the current account sphere.

Well done Revolut for such impressive growth and helping break the hold, of the traditional banks, on the Irish banking market.
Click to expand...

I think it's too early to tell what will happen with Revolut in Ireland.
The friction to join is so low, that many people signed up. Do they actually use it though?

You can make money off un-engaged customers.
Now if people were closing their Current accounts with AIB, BOI etc in droves, and switching everything to Revolut, I think we'd see the banks panicking.
 
Revolut are not a bank which makes me nervous. They are also a loss making enterprise with a horrendous litany of complaints around how staff are treated. None of these new "challengers" are free.
 
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