British fintech Revolut outlines credit, banking ambitions

British fintech Revolut is planning to launch credit cards in Australia and boost unsecured lending, as cash-strapped households turn to debt to cover expenses.

Revolut local boss Matt Baxby. Source: Supplied.

British fintech Revolut is planning to launch credit cards in Australia and boost unsecured lending, as cash-strapped households turn to debt to cover expenses as the cost of living rises.

Since launching cheap foreign exchange transfers in 2020, the London-based fintech has expanded its offering to include crypto and share trading and payment services for small ­businesses.

After doubling local customer sign-ups in 2023 to 500,000, Revolut’s Australian chief executive Matt Baxby said unsecured debt was another area the big four banks that dominate the sector were not serving very well.

“The major banks tend to focus heavily on mortgages rather than consumer credit, so we see a real opportunity there,” Mr Baxby said.

Revolut started providing personal loans as part of a pilot last year, and was “beginning to scale that into (advertising in) some other new channels as well,” such as price comparison websites.

Revolut is locked in a battle with other fintechs and banks, aiming to build the ultimate financial “super app”. This would offer users a one-stop shop for managing everything from everyday transactions to home loans and investments.

It has applied for a banking licence in Britain as well as in Australia to be able to offer deposit accounts and benefit from the local bank deposit guarantee. Mortgages are on the cards in the longer term.

The push comes at a time Australians are increasingly turning to debt to cope with higher energy and grocery bills, steeper interest rates and the rising cost of living. Mr Baxby said the app was helping customers budget better.

“That ability to map their spend, creating pockets to put money aside for something they are saving for, seeing what categories they are spending on each month and setting budget limits around that has been very positively received,” he said.

“Customers are using that a lot – particularly in an environment where the cost of living is under pressure, people want to feel like they are in control of those things.”

As Revolut tries to promote higher day-to-day use of its payment, trading and credit services, it has invested in an advertising campaign across TV and social media.

That will continue into 2024, particularly among the 18 to 44 year old demographic to accelerate growth, and particularly what Mr Baxby called “domestic” transactions among customers. Last year, that doubled to $250m, representing a third of the company’s $670m transaction volume for Australia.

Mr Baxby said the marketing push should be read as “confidence in the offering that we have, and our position in the market”.

He said Revolut had seen increasing demand for credit from existing customers during a pilot trial.

“We always like the product to be best in class when we come to market. So it has been more of a case of testing the product’s appeal and that operationally it works exactly as intended, before we really pushed the button on scaling it up.”

The launch of a credit card will have a piloted release, slated for 2024 or 2025, and Revolut also plans to launch insurance product this year.

The company has 8000 employees globally and expects to grow its team in Australia from 55. After starting with just four staff in 2020, Mr Baxby said he was “projecting pretty strong growth in the team size again over the next couple of years”.

“That’ll also be aligned to the ambition to become a bank, as there will be resource requirements with that.”