We spent weeks researching the success of Revolut Bank and we’ve got a complete analysis that will blow your mind.
Revolut is the leading neobank – a new category in the financial services industry. A Neobank is a traditional banks worst nightmare. They are internet-only or digital-only companies that avoid the cost and hassles of traditional bank branches.
Although only a recent development, neobanks like Revolut, which has blossomed with over 10 million users, enjoy lower infrastructure costs thanks to services like AWS and Azure. And the most significant barrier, a banking license, has become obtainable from regulators or via a partnership with incumbent banks.
Why do neobanks like Revolut matter? Well, they offer all the core functions you’d expect from a traditional bank, like checking and savings accounts, but with a twist; they create significantly better user experiences. In the end, neobanks like Revolut develop products that users love. Oh, and they also have a better business model.
In writing this case study and masterclass, we discovered a real lack of end-to-end analysis of Revolut. So sit back and enjoy a deep dive into the world of Revolut and learn how they’ve achieved their success and how you might apply some of these learnings.
Here are our 14 Surprising Reasons Revolut Bank Is So Insanely Popular:
PART 1: THE PRODUCT
1. Revolut discovered significant value in just five dollars
Now the first place we find Revolut magic is in the ‘Aha Moment’. It’s when you transfer money via the Revolut app, say just five dollars, to one of your friends.
This transaction is the moment when you realise the value of Revolut. As a result, they design the experience to get you to this ‘Aha Moment’ as quickly as possible because once you’ve had this moment, you’re sold! A customer for life and you go and recruit new customers as part of the product experience.Once you’ve had this revolute aha moment, you’re sold!
2. Revolut liberated our data through search
When we use a banking service, we create so much data. From user session to transaction data – servers and applications are swimming with data.
What Revolut understands is that data is only useful if it’s easily accessible for the user. And they do a great job with their ‘search’ function to make data obtainable within the actual interface and allow users to really dig down into the results.
They’ve included neat features including predictive search and real-time filtering of results as you type. Now, this sounds like a pretty straightforward feature but think about your bank apps and how hard it is to actually get to that kind of data.
My bank, for example, doesn’t let me export data to third parties AND doesn’t give me a budgeting app. SO they are effectively telling me ‘no you can’t do this with us, AND you can’t anyone else to help you!’. Thanks a lot.
3. Revolut mastered the cross-sell
Revolut’s dedication to simplicity of user experience means they have earned the user’s permission to be cross-sold.
Let’s have a look at their crypto offering looks right now. Despite the crypto product being a seperate offer to users; it has all the same design patterns of the other Revolut features. This makes movement between products inside the app feel effortless. You almost don’t notice doing it.
Compare the user journey with a traditional bank’s app. Imagine you wanted to buy stocks with your current bank, you’re most likely going to be forced to download one of their companion app that may have little or no resemblance to the app you’re familiar with!
The bad news for traditional banks here is that this seperate app/separate product challenge might not even be by choice. Instead, it might be the result of an antiquated legacy system that encompass and inhibit so many traditional banks.
4. Revolut handcrafted their tech stack
Revolut is the champion of banking as a platform. We say ‘platform’ because they’re not just developing checking accounts, savings accounts, or wire transfers. Their ambitions are to do everything in finance, not only as a bank but right up into insurance and beyond. That’s why we refer to their approach as an ‘end to end’ application. One perfect example of this mentality is Sherlock.
Sherlock is a card fraud detection system that Revolut built in only nine months. They built it on their own and it has very few dependencies. More impressive; it turns out that Sherlock, the fraud prediction system, picks the right fraud transactions about 30% of the time; remarkably higher than industry standard. I’m not going to get too much to Sherlock’s technical details but here’s a great article if you want to go down the rabbit hole
Here’s a quote from Nikolay Storonsky that encapsulates the end to end banking as a platform paradigm.
“The reality is what we’re trying to achieve is [to] build a 10x better financial services company that is 10x cheaper as well. The only way to do it is not building only one product, but building a platform with many products on top of it.”
PART 2: THE PEOPLE
5. Revolut built a default work mode: fast
People and culture at Revolut are pretty impressive. There have been a few challenges here because they have a very ‘hard and fast’ culture. So perhaps a little reminiscent of the early days of Uber, these guys work at hyperspeed.
The intense culture of Revolut might not be for all. In fact, I don’t think it’s for many. Revolut was, and is, still a startup (or a scale up) with a lean mentality. That means work-life balance is out the door. I think you would be lucky to find 2% or 3% of people could genuinely survive and thrive in a working environment like that.
In these circumstances you tend to find a lot of burn and churn. So it’s not surprising to find that several years ago Revolut did suffer several cultural setbacks caused by a high turnover of employees. There’s a very famous Wired article, which brought to life some of the challenges they faced due to this hard and fast culture.
6. Revolut created a culture with high ownership
The hard and fast results-orientated area that comes out of a key-value that they have, which they call ‘Getting It Done’.
It’s very similar to one of my favourite values, which is ownership; truly owning something, owning the outcomes, and not blaming others but you take full responsibility yourself. I want to show you all what this culture looks like.
Here’s a video from Revolut
By taking full ownership for outcomes, the staff at Revolut are able to move fast and achieve exceptional results.
7. Revolut adapted its culture when they made mistakes
In February 2019, Wired revealed severe issues with Revolut’s culture.
Revolut insiders reveal the human cost of a fintech unicorn’s wild rise:
‘Applicants asked to work for free, rudeness, and high staff turnover tarnish the fintech startup’s success story’
Now, I have to give credit to Revolut. Compare them to Uber, who had very similar problems with a hard and fast culture. Uber lost a CEO and has a business model under serious threat.
The difference with Uber is that Revolut has changed without the bloodbath of CEO departures and turmoil. You can see that out of the hundreds of reviews on Glassdoor.
Overall 3.8/5.0 Rating
- 71% Recommend to a Friend
- 77% Approve of CEO
- “Fun, kind, loving, fast paced, rewarding” (in 11 reviews)
- “You get exposure to many different things so you learn a lot” (in 7 reviews)
- “Work life balance: 12-15 working hrs per day plus weekends” (in 22 reviews)
- “Long hours (although not compulsory)” (in 12 reviews)
But I did want to pause here and just look at the pros and cons which are on the homepage for the revolute entry on Glassdoor. And it is bonkers because this is the whole cultural story in a snapshot.
What can we learn here? That when you go to a fast startup, you have to recruit the right people for it. And only a few will be the right fit.
PART 3: THE PROMOTION
8. Revolut small and autonomous growth teams
If Revolut struggled with people in culture, they’re not struggling with their promotion. Let’s start on the inside and look at some things they do that have powered this phenomenal growth.
Core to their growth marketing technique is their growth-teams structure. Similar to a skunkworks or scrum team, Revolut gets a few people together and sets them an audacious goal.
These growth teams are super decentralised and they’re cross-functional. So a representative example I found was: a country manager would have in their team, a marketer, business developer, comms manager and community manager.
Let’s breakdown that team’s skill set;
- They have someone who’s on brand and story. That’s the marketer!
- The business developer who’s looking at what products are being offered, what’s going to grow.
- They’ve got the comms manager, who’s all about the message.
- And the community manager is getting people activated; which is how you get all those advocates sharing their story with others.
This team setup is a big part of their culture because actually they even do this outside of their growth initiatives. For example, their tech team also work in a similar way.
In Revolut, we have a company that uses the classic small, agile, lean teams to go fast with an audacious goal. And what’s fascinating is this is very similar to how Amazon works.
9. Revolut focus on a pre-early adopter user segment
The unique thing about Revolut’s marketing that generated over 10M users is that the effort did not rely on paid media. Instead, they created a snowball effect that would make most CMO’s jealous.
Revolut started with this ‘innovators’ segment. Now, this is not just early adopters; this is the “early early” adopter. Only two and a half per cent of their total customer base is this ‘innovators’ segment.
What is so compelling and instructive for us here is that they chose to start with these innovators because they knew that this segment would create a sort of a snowball effect that would ultimately help them acquire a more mainstream customer.
This approach is a classic use of a design thinking persona where you have a vibrant segment or archetype that you want to focus on as your prime customer. This approach is crucial when time, money and resources are so limited at the start of a new venture or product.
The key thing here is that in the end, the innovator is only going to make up to 3% of their total customer base. But here’s the insight. At the start, it was 100% about the innovator, because they knew if they got the innovator, they would start to get the early adopters and then, finally, the majority of mainstream users.
10. Revolut baked marketing into the product
The second Promotion lesson we can learn from Revolut is they put marketing in the product itself; this also mitigates the need for paid advertising.
Let’s go back to the ‘innovators’ segment. These users love to travel, go shopping and to enjoy entertainment. Now let’s look at how product and marketing intersect when you travel. You’re often making new currency transfers, that’s perfect because that’s the home ground of Revolut.
And it gets better for Revolut. Let’s look at shopping and entertainment. One of the biggest things Revolut users do is splitting bills in restaurants. Revolut makes this such a quick and easy process and it has a natural referral characteristic. This means each bill split is a chance for Revolut to acquire a new customer. They get the opportunity to enjoy a powerful viral effect; with advocacy and a lot of user recommendation.
And that’s in part why Revolut is so prominent today; they baked the marketing into the product. In fact you could say that it’s quite literally a core feature to go out and acquire new customers as part of its use.
11. Revolut created scarcity
Revolut has also deployed a classic marketing launch tactic: the waitlist.
So you get excited, just like I am at the moment to use my new Revolut account. And I jump on, and I have to wait. Now this brings back memories of Dropbox, and a ton of new companies that have used the waitlist to manage system usage. Practically, it means they don’t have too many concurrent users which prevents the whole stack falling over and makes the server load more manageable.
Perhaps more importantly, they’re creating scarcity. The interest and curiosity factor with this tactic is brilliant.
PART 4: THE PROFIT
12. Revolut removed the middleman from business
At the core of their business model is vertical integration. There’s no intermediary. And this is very important; not only the core service but also for all adjacent services. Their services are run, built, deployed, and managed internally.
This standalone approach means they are not dependent on any third parties for the provision of service. And this is a smart long term play because it makes life easy in the back office and on the bottom line.
To first set this up, what you have to realise is that Revolut is competing in a class of dinosaurs. Almost half of the banks in a Fraedom research report claimed that the single biggest obstacle to growth was their legacy systems on the inside.
So all your external dynamics are entirely dependent on your internal legacy systems. That was almost 50% of the banks that participated in this research. So what does this tell you? Revolut has an unfair advantage because they have no legacy systems and because they built them all themselves. So if Revolut want to change or pivot their product, they can do so quickly and affordably.
And I’m going to take it a step further. Here’s founder and CEO, Nikolay Storonsky, talking about how the removal of the middleman helps their business model.
“Effectively when you run all the infrastructure in-house, you can make money out of this business, and the business becomes quite profitable,”
Revolut is enjoying an unfair type of exponential effect. As they cross-sell to customers, they’re making even more money than competitors, because they have so little legacy systems and third-party dependencies.
So there’s a bit of a compounding factor into this business, a bit of a network effect. And this is yet to be talked about, but I’m telling you, this long term business model has a substantial network effect, and that’s why it’s so compelling.
13. Revolut offered more than a checking account
What’s important to understand about their business is that it isn’t just a savings account. They’ve built several revenue streams:
- Subscription Revenue
- Transaction Fee
- International Money Transfers
- Loans & Overdrafts
- Business Accounts
So they’ve got a ton of products. And as I said, they make more per transaction than others because they own their infrastructure.
14. Revolut created a product worth paying for
The closing thought that gets the business model turbo-charged is that if you want to, you can pay for the Revolut product. And if you pay for the product, you get a sexy, special looking metal card and you get a whole bunch of perks and get into some fancy lounges. It’s a status symbol for sure. When you head to Europe, you’ll see a ton of people have got these.
So it’s a pretty impressive business model that will mean Revolut will get more profitable over time. As an investment thesis right now, I think most VCs would have the chequebook open and ready to rock and roll when Revolut comes to visit. The early days of Revolut are so reminiscent of Jeff Bezos and Amazon and the investments they made in the early days. In the future, I’m sure we’ll be talking about the Revolut’ Flywheel effect’.
Let’s wrap up this deep dive into the success of Revolut. First of all, people, their area of improvement, they move fast and break stuff. But I think that they’re moving fast is critical because they’re building all their infrastructure into it from scratch. So they have had to go fast.
In terms of product, they can create all these ‘aha moments’ because they’re liberated from legacy constraints.
When I look at the long term profit, it’s this vertical stack that we just talked about that gives them multiple exponential sources of revenue.
Lastly, they focussed on the innovator at launch. They’ve been creating, engagement, curiosity, scarcity, in some cases, to their advantage. And they’ve been telling a story right from the moment that they asked you to sign up directly through to splitting bills throughout that whole customer journey. They’re telling a story worth sharing.
I hope you enjoyed the article on Revolut. If you want to go deeper to learn more about how they innovated, please check out The Revolut Case Study.