I lifted this from the Revolut website, looks like there is cover under the UK FCA scheme : https://community.revolut.com/t/now...ng-we-use-it-as-our-primary-bank-account/4427
Revolut Now Have 500,000 Irish Customers. Update: 1m customers now.
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Sounds like 1999 all over again. I hope history isn’t going to repeat itself.
Someone mentioned that Revolut don’t treat their employees well.
Uber has caused misery in the third world.
Try telling the residents of central Barcelona that Air BnB’s is about helping the common person with their mortgage payment and you’ll get a different message.
Problem for Revolut is that their turnover is small, only £58m last year out of a customer base they claim is in excess of 7 million. Half of those are not using the services even once a month, so they have failed to monetise their customer base. I wonder how many people are using it purely when travelling?
That's misleading. Individual Revolut deposits are not subject to UK deposit insurance. Revolut has been granted a banking licence in Lithuania which has not yet come into effect. If and when it does funds up to €100,000 will formally be covered by the Lithuanian deposit insurance scheme. However, that raises the question of how reliable that scheme would be if there was a multi-bank collapse in that country, which has attracted a large number of fintech companies. Lithuania is very small and still relatively poor. In time a European deposit insurance scheme might come into being but that still seems a long way off.
NoRegretsCoyote
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Revolut does have a banking licence in Lithuania. Look . It's been in effect for a year now.
As mentioned, individual "accounts" on Revolut are not covered by the UK insurance scheme - they make that clear in the FAQ's. What they say is that they hold all client cash at an account at Barclays clearly designated as client money and therefore not subject to creditors of Revolut in a case of bankruptcy - which is valid. The account at Barclays would be covered under the UK scheme but that would be a single account with the relevant limit - not per Revolut customer
Revolut may have a banking license somewhere but it is not utilising it according to the website - just because they have a banking license somewhere in their legal structure doesn't mean they are acting as a bank. The website is clear that they are not operating "accounts" and are not a deposit taking institution (aka "a bank") and that they are operating as a money transfer agent
Please re-read what I wrote. The banking licence has been issued but it's not yet operational, hence deposits are not yet insured.
NoRegretsCoyote
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I spent a few minutes on the Bank of Lithuania website and it does not seem to make a distinction between licenses that are operational and those that aren't. It would be nice if you could clarify this.
I made no claims about this.
Steven Barrett
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I've been thinking that more and more recently. Except the numbers are much bigger. Wework, a loss making business going from a valuation of $45b to almost going bust. Uber never turning a profit, neither does Tesla. Buying stock in a tech IPO is madness unless you flip it that day. Chances are it's going to sink. Google bought Fitbit recently but it had bombed since it's IPO. GoPro was another disaster.
The "not yet operational" was my own wording which might differ from Lithuanian legal phrasing. It simply was a logical deduction: if operating with a banking licence means the institution is covered by the deposit insurance scheme and if for Revolut that scheme is not yet in effect, this would seem to imply that its banking licence is not yet fully operational (or "implemented" or "in force" or whichever wording you prefer). I'm afraid I'm not aware of the intricacies surrounding this.
From my perspective, I have little on deposit with Revolut, but am not particularly happy they haven't got an operational licence. I tend to rely on my N26 German account in terms of security, and as I live part of the year abroad, I find it useful and simple. I continue to use main stream banks, including in my home abroad for the security they provide, and I never have all my eggs in one basket. Prudence is the watchword for me. I use Revolut for convenience, and it does what it says on the tin.
NoRegretsCoyote
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I am genuinely puzzled by this.
Revolut's blog from a year ago says that:
But the Bank of Lithuania website doesn't seem to have any opt-out from its DGS for deposit-taking instiutions of which Revolut is one:
There are two licensed entities in fact, Revolut Bank UAB which is authorised to take deposits, and Revolut Payments UAB which has a to issue e-money, execute transactions, etc, but not to take deposits.
Is Revolut Bank Payments UAB the one you open an account with? As it is not strictly speaking a deposit-taking insitution it presumably wouldn't be covered by a DGS.
Revolut's blog from a year ago says that:
But the Bank of Lithuania website doesn't seem to have any opt-out from its DGS for deposit-taking instiutions of which Revolut is one:
There are two licensed entities in fact, Revolut Bank UAB which is authorised to take deposits, and Revolut Payments UAB which has a to issue e-money, execute transactions, etc, but not to take deposits.
Is Revolut Bank Payments UAB the one you open an account with? As it is not strictly speaking a deposit-taking insitution it presumably wouldn't be covered by a DGS.
Correct. It has two licenses (I assume two different legal entities). They are not using their banking license and are not acting as a bank (they say this explicitly - not just "strictly speaking" - not at all in any way). Therefore customers benefit from the UK client asset rules requiring firms to segregate client assets from their own in case of bankruptcy but do not benefit from the insurance scheme
Their definition is irrelevant. A deposit is when a customer lodges any cash with a bank - irrespective of the account type or name. You become a creditor of the bank and are on the bank's balance sheet as a liability (to the bank). If Revolut were acting in the capacity of a bank, any money you had with them in any form would be a "deposit".
But this is not what they are doing. They have opened accounts with a Bank and when you give money to Revolut they are lodging into a "client account" at Barclays. Barclays are the deposit taking institution and Revolut are acting as an agent / intermediary. You are not a liability for Revolut, but the combined client account balance is a liability for Barclays
Brendan Burgess
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N26 has 100,000 Irish customers and are planning a major push in Ireland
www.rte.ie
Digital bank N26 planning significant investment here
Digital only bank N26 has said it is planning to significantly increase its investment in the Irish market next year and is considering adding new services here.
You have to have a few thousand in your current acc to avoid charges, if you multiply this amount by the number of customer there s a tidy amount for them to invest
How exactly do you think they make money on a load of deposits in EUR in the current environment.
Revolut aren't a Bank, so every €1 a client places with them has to be deposited in a client account with a bank - which will be earning less than nothing probably (if they are avoiding paying negative interest on that balance I'd be surprised). So they aren't making money from client deposits at the moment.
Even a bank struggles to make anything on EUR client balances. While a bank can use deposits as part of the general balance sheet, they still have to maintain about 10% of the value of client balances in cash - and they will be paying 40 or 50 bps on that. They are also restricted on types of other assets they can hold - so a portion of assets will be in bonds (again negative rates). Where they make their money is on what can be lent out; an avenue Revolut don't have - or at least they can't include client deposits in the calculation of what they could lend out. They could only lend out of their own capital which I suspect is pretty small.
They have other products in the pipeline which, in theory they could turn into revenue streams - but again they might run into the problem outlined on other threads... dropping transaction prices to near zero to gain market share based on the fact that variable costs on electronic activity is low doesn't address the overhead and structural cost to run a business of scale. So I'm not sure that the market share makes up for the low unit cost.
bigjoe_dub
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irish banks are going to get a good spanking sooner rather then later. my son had a savings account with Ulster bank for years. he turned 18 recently and wanted a debit card. would not deal with him at the branch. told him to do it online. now the usual show us a bill in your name to prove your address. what 18 year old has house hold bills in their name. he suggested a Ulster bank statement they sent him. no, that wont do. for the love of god. I downloaded the revolut app myself to check it out. the next day I was able to use my phone to pay for my coffee. look Ulster bank, it is not that hard.
Hello,
While I agree with the point that your making, let's not forget that we are comparing apples and oranges here, when we compare Revolut to "land based banks".
There are lots of things that our traditional banks can learn (and copy) from the likes of Revolut, but they'll never be the same.
While I agree with the point that your making, let's not forget that we are comparing apples and oranges here, when we compare Revolut to "land based banks".
There are lots of things that our traditional banks can learn (and copy) from the likes of Revolut, but they'll never be the same.
NoRegretsCoyote
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@bigjoe_dub
Ulster Bank is licenced as a bank in Ireland with all of the regulatory obligations that entails. They are legally obliged to satisfy themselves that your son lives at your address before they give him an account.
Revolut is strictly speaking not providing full banking services but is instead licensed for "Execution of payment transactions, including transfers of funds on a payment account with the payment service provider of the payment service user or with another payment service provider: execution of direct debits, including one-off direct debits, execution of payment transactions through a payment card or a similar device and/or execution of credit transfers, including standing orders "
Presumably their customer onboarding obligations in Lithuania for this are much more relaxed than they are for a full bank in Ireland.
It's not unlikely that there will be some kind of event for Revolut or N26 where customers will lose access to their deposits for a period of time. They are simply growing too fast to deal with risk on multiple fronts: infrastructure, regulation, financial crime, etc.
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