Will Revolut be successful in Asia Pacific?

Written by Kapronasia || March 07 2023

Forgive us for being a bit skeptical about Revolut’s swing to profitability. It took an awful long time for the company to release its 2021 financial report (we’re now in 2023), and when it finally did, the £26.3m profit the company reported was less remarkable than the fact the company’s auditor could not verify £477 million in revenue from subscriptions, cards, foreign exchange and wealth activities.

So what does this mean for Revolut’s business in the Asia-Pacific region? Let’s start with the good news. The more sustainable the company’s business model appears to be, the better a chance it will have at getting a UK banking license (which it applied for more than two years ago) and that could open the door to other opportunities, like a banking license in Australia. “The UK is a bottleneck for other licenses,” Revolut CEO Nikolay Storonsky said at a conference in November.

Revolut won a credit license in Australia in February 2022, shortly after receiving permission to offer securities trading to Australian customers. But to complete the trifecta, the UK fintech unicorn needs the license to become an authorized deposit-taking institution (ADI) in Australia. Being able to both take deposits and lend to Australian customers would allow Revolut to compete more evenly with incumbent banks.

We’re less sanguine about Revolut’s crypto business, which always seemed opportunistic. Accorded to Sifted, crypto made up around 30% of Revolut’s revenue 2021 but just 5-10% in 2022. Once the crypto bust ends, Revolut might be able to pivot back to decentralized virtual currencies in Australia and Japan, but not in India, a market for which Revolut has big plans. Indian regulators see crypto as a bigger threat than opportunity and seem intent on taxing the country’s crypto market to death.

Whether Revolut can succeed in India may largely depend on factors over which it has limited control. On the one hand, its focus on India’s remittances market is reasonable. India’s remittances grew 4.6% annually to US$87 billion in 2021, remaining the world’s largest, according to the World Bank. Since sending money to India through traditional channels is usually pricey, Revolut has a significant market opportunity if it can offer cheaper, faster and more convenient services to Indian customers.

That said, Indian regulators can be mercurial, and it is hard to say if and when Revolut will obtain all the requisite licenses it needs to be successful in the country. In early 2022, Revolut did obtain Indian international money transfer firm Arvog Forex for an undisclosed sum. This deal is supposed to allow Revolut to launch a cross-border remittances service for Indian customers, but it has not happened yet.  

Meanwhile, Revolut keeps expanding into other markets, with New Zealand the latest and Mexico and Brazil slated for later in the year. Even with its large war chest, is hard to see how Revolut will have all the necessary resources to thrive in so many different countries, all with different regulatory regimes.