Revolut versus Nat West - which would you bet on?

Revolut just raised $800m from SoftBank Group Corp. and Tiger Global Management - to build a 'global bank' based on a #superapp strategy. Six years from birth it's now the UK's most valuable private company - ever - and worth more than NatWest Group (origins 1727).

The valuation multiple is frothy to say the least: 74x last 12 months revenues versus 2.3x for NatWest. Today it generates about $50 per customer, versus $420 at NatWest and $90 at Chime (born 2013).

Revolut built itself originally on top of existing FS infrastructure - MastercardBarclays and Paysafe Group - focused on reducing FX costs for travellers. The secret to it's success ('our secret weapon' according to CEO Nik Storonsky) has been it's ability to #blitzscale: attracting customers fast, across multiple geographies, by offering a wide array of compelling products and world-beating User Experience.

This agility has enabled it to pivot fast during the pandemic when no one was travelling. In 2020 it launched 15 products/innovations for retail customers, including cryptocurrency, investments and insurance.

Unlike incumbent banks it can scale at low cost. That's what investors like, in addition to the #superapp#platformstrategy narrative (its rapid rebundling of fintech and adjacent innovation), its ability to launch quickly in new markets (36 at last count) and its focus on fee income rather than interest income.

The key question is: will it be able to generate profits from its fast growing, global customer base? Given it's market leading ability to create compelling solutions, and it's growing maturity in corporate governance and compliance, I wouldn't bet against it, especially with the deep pockets of Softbank behind it.

I've personally been a customer of NatWest's for over 30 years, through sheer personal inertia. The tangible value I get and the affinity I feel is very small. Maybe it's time to switch...?

#newgrowthplaybook #digitalecosystems #openbanking #embeddedfinance

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