Traditional banks have long been at an advantage when it comes to customer data due to having access to vast amounts of information that financial technology (fintech) competitors cannot obtain. However, this situation has been changing recently, especially in Europe. New European legislation that was introduced in 2018 called Payment Services Directive (PSD2), and it has put traditional banking products and services under a threat from a new type of digital-first startups. A handful of them have already seen a big growth in users and have broken even operationally.
What these startups have in common is the goal of creating customer-centric banking products that target underserved individuals and businesses. Known in the industry as digital challenger banks, they offer all of their services online and have no physical branches.
Revolut is one of such successful digital disruptors. With a mission is to convince people that there are better alternatives to traditional banks, this small startup quickly grew to into a fintech heavyweight with $1.7bn valuation and ambitions of extensive global expansion. In December 2018, Revolut received European Banking License from the Bank of Lithuania that gives it permission to operate throughout the European Union.
By some measures, Revolut has been a sensation since its foundation in 2015. The service it offers has rapidly recruited millions of satisfied customers, building a relationship with them that goes beyond numbers, making them happy and eager to use Revolut’s services, as well as wait for new exciting announcements about fresh disruptions that usually happen to be great. Suspicions have arisen that Revolut is actually testing the limits of the highly regulated finance industry, with its ‘move-fast’ ethos and strategy based on belief that it has to be compliant, but how compliant it must be is another thing altogether.