LONDON — Hot fintech app Revolut is launching superfast peer-to-peer loans that will let users borrow up to £5,000 in as little as two minutes.
Revolut is partnering with peer-to-peer platform Lending Works to let its UK users borrow between £500 and £5,000 through the app at a representative APR rate of 9.9%.
Revolut, which began as simply a foreign exchange app, says users will be able to get funds in as little as two minutes, thanks to its integration with credit check providers and the fact that users will have already passed through legally required "Know Your Customer" checks when they signed up for the card. Customers applying for a loan only have to specify the amount they want to borrow, their monthly income, and their residential status.
It sounds like the product could be a magnet for fraudsters but CEO and cofounder Nikolay Storonsky told Business Insider: "We spent almost a month adding new rules to our fraud detection system, specifically related to credit. It's all in-house.
He added: "On our platform, it's very, very low [fraud]. It's less than 2 basis points of all funds being uploaded. The industry is probably 20 or 30 basis points."
'The best possible financial product at the best possible price'
Peer-to-peer loans are just one of a number of new products recently launched by Revolut. In January Revolut launched current account features within the app that allow people to get their salaries on the card and set up standing orders. Last week, Revolut also partnered with property investment platform Bricklane to offer an ISA product.
The startup is moving fast to capitalise on its large user base. The product began as as a zero-fee foreign money card linked to an app that gave people the best rate available when spending money abroad. As a result of effectively giving its product away, it attracted a huge number of users. The company has 530,000 users across 42 European countries after just 18 months.
Storonsky told BI that he is looking to move beyond money exchange and turn Revolut into an app where customers can get "the best possible financial product at the best possible price."
Our goal is to get beyond banking. You don't really need to be a bank and being a bank actually limits you.
He added: "In April we are launching travel insurance and device insurance, giving you wholesale rates. It will be 40-50% cheaper compared to other providers. We're also launching a wealth product where you can effectively invest in different asset classes at the best possible price."
Storonsky says Revolut, which has raised over £12 million, is currently testing its business product with several companies and plans to launch the service in April. The company said 3,000 businesses had pre-registered interest in the product when it was first announced in September last year.
Revolut also has a partnership in the works that is financial service product. Storonsky wouldn't give anything more away but said: "It ties up perfectly with our branding and our usage with our customers."
Almost all of Revolut's products are done through partnerships with other providers. Revolut signed a memorandum of understanding with the Bank of Lithuania last year, suggesting it may go for a banking licence there. But Storonsky suggested Revolut doesn't intend to apply for a banking licence.
He said: "Our goal is to get beyond banking. You don't really need to be a bank and being a bank actually limits you. If you look at all of the digital banking startups, they're all local right — only UK, only France, only Germany. Our goal was always to give people the only account you need for your international life. The same for business. We're more like a solution for people who are global, people who travel a lot, people who are expats. Same for businesses."
'I think we're going to get at least 10 times more compared to them'
RevolutRevolut is not the only startup trying to become a hub for financial products on your smartphone. App-only bank Monzo says in its investment deck that it wants to become a "financial control centre" and partner with other providers for things like loans and currency exchange. German startup bank N26 also wants to "build a marketplace — the fintech hub — and let everyone buy things in one place."
However, Storonsky is bullish and believes Revolut can make much more money than rivals. He said: "Out of all the startups you mentioned — Monzo, Number26 — I think we're going to get at least 10 times more compared to them, just because the different business lines that generate us revenue."
Storonsky said most of the partnerships give Revolut at least a 50% revenue share and listed off several other ways that Revolut is already bringing in money from its user base.
"For example, right now when you order a card you pay £5 and you've got different delivery methods. 50% of users, they chose to pay for fast delivery. The other is interchange revenue, we've got fair use revenue, ATM revenue. We've got very good revenue on promotional activity that we do, for example in November we did some promotional activity with Moneyfarm. These kind of things, they really generate us a lot of revenues compared to other app banks which don't have clients and don't have revenues."
Late last year Revolut was forced to pull back on its services and stop issuing new cards briefly after an issue with a partner. You could argue that this is a symptom of the company moving too fast.
But despite the flurry of activity at the startup, which has 90 staff, Storonsky says he feels Revolut could be doing more.
"To be honest, I am worried we're not moving fast enough," he told BI. "I think we can do things faster. Much faster. We're still discovering how we can optimise things to move forward."
Revolut is backed by well-known European tech VCs Index Ventures and Balderton Capital. Last July the startup raised £1 million through a heavily oversubscribed crowdfunding that valued the business at £42 million.