Buenos Aires — In late April, Argentine users of Play Store and App Store were surprised by the appearance of mobile application Revolut, a British fintech valued at $33 billion and with operations in more than 30 countries, which is beginning to take its first steps in Latin America.
After hiring country managers in Mexico and Brazil, together with their respective teams, the company’s expansion team is keeping a close eye on other Latin American markets, with a view to an eventual decision to launch in each country.
“We want to become the global financial super app, and Latin America cannot be left out of this approach of complementing all other markets,” Glauber Mota, Revolut’s CEO for Brazil, tells Bloomberg Línea.
As part of this planning dynamic, a user waiting list was made available to gauge interest among users in Argentina, but also in other countries in the region, as the company had done before in Brazil and Mexico, and in a matter of hours, more than 10,000 Argentines had signed up.
For the time being, the focus of the company founded in London by Nikolay Storonsky and Vlad Yatsenko remains on Brazil and Mexico, markets where it sees great opportunities due to the maturity of the fintech markets in both countries, and also because of its large financial backing, which will allow it to continue focusing on growth, while many of its competitors are adjusting to a new global scenario of higher interest rates.
“In Brazil we have seen many tech unicorns lay off workers in the last few weeks, and for us, those local unicorns laying off people means more of a talent pool for our growth phase,” Mota says confidently, “as QuintoAndar, Facily and others have released a lot of tech talent into the market, and we are interviewing and hiring some of those people”.
The following conversation has been edited for length and clarity.
Bloomberg Línea: Has Revolut hired people in Latin America outside of Mexico and Brazil?
Glauber Mota: For the moment it’s only those two countries. Everything else that you may see, whether it’s a waiting list or any other local initiatives in Latin America, are exactly the same steps that we carried out for Brazil and Mexico before. The first step is to open a waiting list to sense market interest in Revolut, even before having any specific plans to establish local operations.
So, the only two markets that are 100% confirmed to have a launch date are Mexico and Brazil?
Why is Revolut arriving in Latin America now, considering the region already has an abundance of fintech players that have had a head start?
It’s a combination of three factors. The first one is exactly that opportunity you mentioned. Some companies see a challenge in locations that already have several players doing a good job and dominating the market. But this is a positive trend in terms of digital adoption. The latest research that we have access to in Brazil and Mexico shows that the number of people that are using digital banks as their primary accounts has increased a lot. For Brazil it’s almost 40% of people that have at least one digital account that they use for daily activities. This means that the barriers of entry that we had a couple of years ago are now lower. The technology has also evolved a lot, so it’s much easier to establish a new platform in a new location and adapt to local regulatory requirements.
There are many providers now of products-as-a-service, and Revolut has learned a lot from expansion in other geographies. It’s easier now than before to have a mature position in the markets. And finally, in these Latin American locations, we have identified the link between the expertise that Revolut has in its products, and their complementarity with more underserved markets for these local operations. Nubank is considered one of the biggest fintechs in the world, but is still very concentrated on its credit card product, and trying to penetrate others. It’s also still very local, despite their initiatives in Mexico and Colombia, and their client base is focused on the bottom of the pyramid of the population. That means we have a complementary position, because we have specialized in travel products. FX is by far the biggest strength in mature markets like Europe, and there is a lot of demand in more emerging markets, with a very underserved product in the region. Remittances in Mexico are still underserved, and there is plenty of space to create a good experience for clients. And in Brazil, people are still going to exchange bureaus to buy fiat money before traveling, or using credit cards with high taxes and fees.
What is Revolut’s main objective as a company globally?
To become the global financial super app, and Latin America could not be out of this scope to complement all the other markets.
How many Latin American countries have you launched waiting lists in?
I don’t have the number, but I would guess it’s most of the main markets. I actually didn’t know Argentina had the waiting list already, because the expansion team works works worldwide doing that. It may happen in the Philippines, in other places around the world, as well. Colombia, Chile and Argentina would be my first guess.
The majority of e-wallets, challenger banks, and fintechs in general are still in a penetration phase with heavy investment in marketing and virtually non-existent profitability. How much of a priority is profitability for Revolut right now as a company, and how far away do you think you are from achieving it in Latin America?
The latest public figures are from 2020 still. The 2021 results will be available very soon, most probably. The trend that can be perceived from 2015 to the latest public numbers is that the diversification of revenue streams has been a priority for Revolut. One-third is payments, card usage everywhere, another third from wealth and trading activities, including stocks and crypto. And more or less one third from subscriptions to the different plans that Revolut has: standard, premium and metal. Many other things, including insurance or a hotel booking service, are adding to that trend, in the path toward breaking even. And of course, preparing the company for the next stage of growth. More mature markets are focusing on cross-selling and profitability. For expansion markets, of course the there is a penetration curve before getting there. Revolut’s leadership is going slower on the profitability path precisely to continue with global expansion. Maybe the payoff is bigger if we keep going fast instead of looking for profitability in the short term.
So, despite the global scenario of higher interest rates and lesser liquidity, Revolut will still focus on growth?
In Brazil we have seen many tech unicorns lay off workers in the last few weeks. We are in a good position from that, as, for us, those local unicorns laying off people means more of a talent pool for our growth phase. And we are well diversified everywhere, worldwide, meaning we can afford to be in different stages in different locations. QuintoAndar, Facily and others, just unleashed plenty of tech talent in the market, and for sure we are interviewing and hiring some of them.
What do you see as the main obstacles toward being able to position yourself in these markets?
Brazil is a very special location for us because it’s a bigger market. The talent pool is good, and we have huge plans here. But we still are not a well known brand, locally. We have the recognition abroad, as being one of the first in Europe doing a differentiated product, with a member-get-member approach that worked quite well. My inspiration at my previous job, where we launched a digital bank, was Revolut. I visited them in 2019 to understand how they do things. We are still planning how to invest to become known publicly, maybe through partnerships with local distribution channels. The core of our product initially will be focused on travel and e-commerce. And then we will introduce more products, such as credit.
How many people has Revolut hired in the region so far?
I can only talk about my own team. We have already 15 people and we are growing quite fast. A month ago when we announced our arrival, we were 10. And Revolut has a lot of Brazilians also working for the global team, from Brazil. We will also build a Latam tech hub in Brazil, that will serve the whole region, with engineers and product people. Sao Paulo was chosen because of its talent pool.
Do you have launch dates for either Brazil or Mexico?
No specific dates, but our service for family and friends will be launched in the beginning of the second half of the year, so probably July or August. For broader clients on our waiting list in Brazil, it’s going to be more for the fourth quarter, and aiming for a launch before the Qatar 2022 World Cup.
What are the factors that will determine whether or not Revolut launches in a given market?
For sure it’s a mix between the attention that Revolut will choose to give that market - Mexico and Brazil were chosen as the locations to place all of the effort at the moment - and demand for the product. Of course, the regulatory environment and talent pool also count, as the next layers of decision. Brazil has also become a place that welcomes new challengers, so the maturity of a market is also important.
How important will crypto be for Revolut in the region?
For sure it’s in the pipeline for Brazil, because there is a lot of demand. Revolut has any easy-to-use and secure way to give access to clients. At my previous job I was also building a crypto platform, and Revolut was also the model I was following. First we will launch the global account, but crypto for sure will come. Then there is the new economy, or new banking, with Web 3.0, blockchain solutions and decentralized finance possibilities. There is a lot to come. What I can confirm is that Nikolái Storonski [Revolut’s cofounder] told Reuters recently that this is an important topic for Revolut, and that he is motivating people to think deeper about it in the UK. Everything they build there, we’re going to leverage in the region as well. And locally, I’m making sure I hire people with some background in crypto, because sooner or later it’s going to become important for us. In our compliance team, I have hired people that have come from Mercado Bitcoin, for example. But I am also looking at technical profiles with blockchain and smart contract capabilities.