Revolut has started offering UK personal loans of between £2,000 and £25,000, repayable over one to five years. It is the London fintech's first significant move into consumer credit since it received its full UK banking licence earlier this year, and it has 13m customers in the UK.
Founded in 2015, Revolut grew on payments, foreign exchange and paid subscription plans. It now reports 80m customers worldwide, 13m of them in the UK.
Lending is the product it could not offer at scale in Britain until the full banking licence came through earlier this year, after a four-year wait. With the licence, Revolut can lend against its own deposit base.
The launch
Revolut UK said loans will come with transparent terms, no fees for early repayment and funds paid out within minutes of approval. It has not published representative APRs or the size of the loan book it plans to build in the first year.
Francesca Carlesi, chief executive of Revolut UK, said British borrowers face unnecessary friction and complex fees. She added that bringing credit into the app helps customers keep their finances in one place.
Carlesi also said Revolut plans to enter the UK mortgage market eventually, but gave no timetable.
The numbers
Revolut's group profit rose 57% to £1.7bn in its latest financial year, driven by subscriptions, payments and wealth products. Subscriptions were the fastest-growing line, up 67% to £708m.
Revenue per customer remains below that of rivals, because many users still treat Revolut as a second account rather than their main bank. Lending is one of the main ways a bank can raise revenue per customer, since loans earn interest income that payments and FX do not.
The competitive picture
The UK's four largest banks, NatWest, Lloyds, HSBC and Barclays, hold about 60% of the £2.5tn deposited in the UK banking system. Lloyds alone has roughly a fifth of the mortgage market, where it competes with NatWest, Santander, Barclays and Nationwide.
What it means for the cap table
Credit income is central to how investors will value Revolut ahead of any listing. A balance sheet that earns interest is normally valued as a bank, while payments and subscription revenue are valued more like a tech platform.
How quickly the loan book grows, and how its default rates compare with those of incumbent lenders, will be among the first numbers investors look for in Revolut's next annual accounts.
Original source: City AM — https://www.cityam.com/revolut-to-take-fight-to-high-street-banks-with-uk-personal-loans/
