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Fintech: Why the revolution of Revolut could fail

The fintech, steered by ex-Credit-Suisse banker Nikolay Storonsky, shines with phenomenal growth. However, Revolut now has difficulties in a field in which digitization and scales are scarce.

“Get Shit Done!” Is written in large letters in the London offices of Revolut. So far, the motto has worked brilliantly for the fintech in terms of payment processing. Launched by former Credit Suisse dealer Nikolay Storonsky, the startup has brought it to 4 million customers since its launch three and a half years ago, with an estimated 50,000 in Switzerland. And with a valuation of around $ 1.7 billion, Revolut has achieved the coveted “unicorn” status after all the startup companies strive.

Revolut made a name for himself

But the uncompromising growth strategy last revealed unsightly side effects.  Revolut made a name for himself with a dubious approach to employees and an advertising campaign operating hard on the borderline of permissible advertising. This is scratching the image of the fintech revolutionaries around the 34-year-old CEO Storonsky.

Better to apologize than ask for permission

Even more disconcerting for the startup is that the UK’s financial regulator FCA is currently investigating whether Revolut had shut down one of its 2018 automatic surveillance tools over several months. Compared to the agency “Bloomberg” commented the boss with a shrug. “We’ve always been told you have to be compliant,” he said. “But the question is: how compliant?”

In fact, embarrassing compliance with rules that have as many financial professionals as you can in almost any industry could become a sticking point for revolution. Because the attitude of Facebook & Co – apologize rather than ask for permission – leads in this highly regulated environment quickly on the wrong track.

And as it turns out, in this environment, the two best assets of Revolut, the digitization and the large scales, are limited. Even more, they become a risk.

150 compliance specialists to 4 million customers

For Storonsky it is clear: “If we can not fight financial crime through automation, we will not achieve any economies of scale.” But the danger is that algorithms overlook risks. All the more so since Revolut now operates in 30 countries and the compliance machines have to sift through a large number of documents – including e-mails and PDF files. This is not child’s play. Especially when the machines are not turned on, as Revolut was last accused.

About the rule violations

Out of around 800 employees, 150 of them analyze Revolut’s business after rule violations. You are confronted with a million-dollar clientele that is growing rapidly. The number of users of Revolut services tripled in 2018. Sooner or later, surveillance by meat and blood experts will be suspended.

In other fintechs in addition to the envy of Revolut is also worried about the fury, the rival could overlook in their growth tumble serious violations, and thus harm the reputation of the emerging industry. For them, the motto “Get Shit Done!” Has an increasingly unpleasant aftertaste.

Published inFintech
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