Revolut app logo. Revolut is a digital banking alternative that includes a prepaid debit card, … [+] currency exchange and peer-to-peer payments.

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Revolut’s PR machine has long sought to portray the company as a rising player in the Asia-Pacific (APAC) region. These efforts date back nearly six years. Revolut entered Singapore and Japan in late 2018 and Australia in early 2019. In recent years, it has invested heavily in India. The UK’s finetech unicorn has spoken of Enter China in 2021but these efforts do not seem to have borne fruit.

Having finally made a profitA reinvigorated Revolut is likely to double its APAC expansion. The company reported a pre-tax profit of £438 million, compared to a loss of £25.4 million a year earlier. Revenue nearly doubled to £1.8 billion. “Our customer base is expanding at an impressive pace and our diversified business model continues to fuel exceptional financial performance,” Revolut co-founder and CEO Nik Storonsky said in a statement.

However, success is far from assured.

Growth in Singapore

Judging by some of the publicly available figures, Revolut’s business in Singapore is growing at a healthy pace. According to figures cited by Fintech News SingaporeYear-on-year, users grew 77% in 2023, while customer e-wallet balances increased 52%. Overall card payments increased 83%, from 7.07 million in 2022 to 12.95 million in 2023. Physical Revolut card transactions increased more than 93%, while virtual card payments increased 64%. “Our 2023 results prove that we are truly becoming an everyday app for Singaporeans,” said Matt Baxby, CEO of Revolut APAC, in a statement.

When considering Revolut’s business prospects in Singapore, it’s worth keeping in mind that stringent capitalization requirements have led the company to avoid applying for a digital banking license in Singapore. Since it doesn’t operate a bank in the city-state, it can’t directly offer deposit and lending products. It remains to be seen whether alternative solutions will pay off.

For example, at the end of May, Revolut launched Flexible accounts in the city-state, which invests customer deposits in USD-denominated money market funds (MMFs) managed by global asset manager Fidelity International. Revolut calls it a “high-yield savings product” due to an APY of 5.21%.

Additionally, in mid-June, Revolut said users can now hold up to S$20,000 in their e-wallets at any one time, up from S$5,000 previously. Annual spending limits have also been increased from S$30,000 to S$100,000. “With the limit increase, we expect in-app payment volumes to increase at least two to three times,” said Revolut Singapore’s managing director. Raymond Ng he told The Straits Times.

Slow progress in India

While Revolut has been keen to highlight its growth in Singapore, it has been less forthcoming in discussing its business in India. The subcontinent is a challenging market for Revolut, where the British company has sought to carve out a niche in payments before moving into trading, investing and lending.

Three years on from its foray, Revolut has little to show, even though the Reserve Bank of India granted the British fintech in-principle permission to issue prepaid instruments (PPI), including prepaid cards and wallets. We know it took this long partly because of data localization requirements. At the time, Revolut India CEO Paroma Chatterjee noted that there were 175,000 people on the waiting list for these products. We wonder how many of them will become profitable customers.

Revolut commits to investing 45 million dollars in India in 2022, and it will be interesting to see how far that money goes, and whether the company is willing to up its game going forward. With Google Pay and Walmart-backed PhonePe dominating domestic payments, it’s unclear how regulators will perceive a foreign fintech with ambitious plans for the cross-border market.

Opportunities in Australia and New Zealand

Australia and New Zealand offer Revolut the best opportunity in the Asia-Pacific region. They are very similar to its home market of the UK, and the UK fintech unicorn could eventually get banking licenses in both countries. Revolut already has a lending license in Australia. It just needs an Authorized Depository Institution (ADI) license to be a fully-fledged bank.

In February, The Australian reported that Revolut is planning to launch credit cards in Australia and increase unsecured lending. The company sees growing demand from cash-strapped families who are borrowing to cover higher expenses related to the rising cost of living. Baxby told the paper that Revolut has doubled local customer sign-ups in 2023 to 500,000 and sees an opportunity in unsecured debt as the country’s big four banks focus more on mortgages than consumer credit.

Revolut began offering personal loans in Australia as part of a pilot last year. It also plans to launch a credit card pilot in 2024 or 2025.

Future perspectives

To some extent, Revolut’s ADI offering may hinge on whether it eventually receives a UK banking license. This process has dragged on for about three years so far. In November 2023, Revolut appointed a new UK CEO. While the company denied that the move was related to its banking license application, we wonder if that’s entirely accurate. In the meantime, Storonsky said The CNBC earlier this week, “I hope we’ll get it sooner or later [the UK banking license].”

If Revolut gets approval for a UK banking license, it would signal the legitimacy of the company’s banking aspirations to other regulators. Approving Revolut’s ADI would then become a safer bet. However, if the UK banking license doesn’t come through, things could get complicated for Revolut in Australia.

Given the different fintech segments that Revolut is exploring in Singapore and India, the UK banking license is less directly relevant to its business in those two countries. We expect the UK fintech unicorn to continue to gradually expand in the city-state, while India may prove difficult for Revolut to penetrate.

In India, Revolut must demonstrate that it can meet the needs of a large and diverse emerging market. The jury is still out on whether Revolut can create a compelling value proposition for Indian customers, given the plethora of competition and regulatory hurdles it faces there.

Based on its actual business performance (not its account numbers), we think Revolut has ultimately been a bit too ambitious in its APAC expansion. The company has its work cut out for it to prove the skeptics wrong.

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