Revolut needs more deposits

Revolut is seen as the leading FinTech unicorn neobank from Europe only rivaled by Nubank on the global market. Everyone watches Revolut, sees the rapid customer growth and waits for the Neobank to rival the big incumbents.

People at Revolut are doing some of the best work on the market introducing tens of new products every year and offering one of the best customer service in the banking industry. One of the few problems the fanciest kid on the block has are the deposits or rather the lack of it.

According to Revolut's annual report from 2023 - the latest one available the Neobank had 38 million retail customers with total customer balances of GBP18.2bn. Sounds great but, what does it say to us about an average Revolut customer?

If you can divide numbers, you will see that an average Revolut customer holds:

GBP 18 200 000 000 / 38 000 000 = GBP 478.95

An average Revolut customer only holds around GBP 480

In his most recent interview with Harry Stebbings from 20 VC Nikolay Storonsky said that Revolut has "some of the customers that have millions on their accounts" and that "he would like to build a private banking". 

I will boldly assume that you don't build a private banking for 100 customers even the wealthy ones but you do for 1000 wealthy customers. Having "millions on their accounts" would mean at least 2 millions but probably even more. Let's assume that Revolut has around 500 high networth individuals with accounts that hold 5 millions each.

GBP 5 000 000 x 500 = GBP 2 500 000 000

So, based on this assumption an average account balance is: 

GBP 15 700 000 000 / 38 000 000 = GBP 413 

I know that I haven't distracted 200 high networth individuals from 38 million customers - they are negligible. I also know that these math equations are irrelevant, since having GBP 413 on your account or GBP 478 are more or less the same.

Now, the question is: Who has deposited multi millions into the Revolut's accounts besides Revolut's founders and why? 

Revolut's main goal is to grow their balance to start offering proper loans and mortgages. Transactional business is ok but everyone in banking knows that the real money is in lending.

Investor expectations are high and Revolut is one of the few FinTech that can rival the incumbents but they will need to generate way more revenue then they do now. 

Let's compare Bank of America and Revolut:

Total Revenue $94.2 billion vs. $2.2 billion

Net Profit $24.9 billion vs. $428 million

Customer Base 69 million in 2024 vs. 38 million in 2023

Valuation Approximately $300 billion vs. $45 billion

In order to rival the incumbents the Neobank needs to concentrate on converting the existing customers into the revenue stream. They need to see Revolut as their primary source of banking services and this will only come with trust not with the constant introduction of new products.

I'm not going to speculate about the Revolut's interest in entering the war torn Ukrainian market but it raises some interesting questions.