FinTech News
Revolut Reportedly Considering U.S. Lender Acquisition
The United Kingdom-based neobank Revolut is reportedly eyeing a few different options for further expansion in the United States.
About Revolut’s Reported Plans:
According to Bloomberg, Revolut is looking at the possibility of acquiring a U.S. lender. The FinTech is said to be exploring the idea of hiring investment bankers to advise them on such a purchase.
One factor that’s apparently giving Revolut pause on this plan is whether or not it’s the path best for expansion. An alternative route would see the company applying for a banking license of its own. However, Revolut previously attempted to obtain such a license in 2021 before ultimately shelving its application.
Currently, Revolut operates in the United States by partnering with several licensed banks. For example, the app’s Savings Vaults are held with Sutton Bank, its prepaid cards are issued by Lead Bank, and the Revolut Visa Credit Card is issued by Cross River Bank.
Speaking of savings, according to sources Bloomberg spoke with, Revolut is expected to launch new savings products for the U.S. market in the coming weeks. The FinTech has also upped its marketing in the states as of late, including a recent promotion in New York where MTA riders who opened an account using a special promotional link could earn 100% cashback on up to five rides paid for using their Revolut card.
In Context:
While many FinTechs partner with licensed banks (as Revolut currently does) to offer various services, others have since become full-fledged banks. What’s more, some prominent examples highlight the different paths Revolut is apparently considering.
In 2020, Varo became the first digital bank to be approved for a national banking charter. Meanwhile, marketplace lender Lending Club completed its acquisition of Radius Bank in 2021. Similarly, in 2022, SoFi acquired Golden Pacific Bancorp, forming SoFi Bank.
My Thoughts:
I remember when I first discovered Revolut, my mind was kind of blown by all of the features they offered. In particular, I loved the idea of being able to hold various foreign currencies and spend them via the debit card. Since then, I’ve found that I don’t use the app as much simply because other options with more competitive rates came along.
Despite that, I’d be very interested to see Revolut become a “real bank” in the United States. In fact, if they were successful, I’d likely become more interested in returning to them, seeing as I’ve grown more skeptical of the FinTech “partner bank” setup in recent years.
As for which route I think Revolut should take, I do think that the acquisition route would likely be faster. Then again, now that there is precedent for FinTech banking charters thanks to Varo, perhaps that process has sped up somewhat. Either way, I’m excited to see what Revolut decides to do and would welcome them stateside.
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