Revolut plans advertising sales push as it waits for UK banking licence

Revolut is exploring plans to monetise customer data through sharing it with advertising partners, as the fintech seeks new sources of revenue while its application for a UK banking licence remains in limbo.

“We could become a media [business]…a place where you have an audience and data about the audience and you monetise this,” Revolut’s head of growth Antoine Le Nel told the Financial Times in an interview.

The London-headquartered group could in the near future derive a “proper chunk” of its total revenue from targeted advertising, he said.

“We know how [users] navigate inside the app, we know some of their interests that they have because they’ve clicked on this and that,” the fintech executive added.

Revolut has hired Inam Mahmood, former head of ecommerce partnerships at TikTok UK, to lead a sales team of about 30 people for its so-called media strategy.

One person familiar with the business plan said the company had set an internal target for revenue derived from advertising of about £300 million by 2026. Revolut declined to comment on the target.

Its entire business generated revenues of £923 million in 2022.

Revolut’s push to generate a bigger slice of earnings from advertising comes as investor hype surrounding the fintech sector has waned and its application for a UK banking licence appears to have stalled. It uses a full banking licence issued by the European Central Bank (ECB) to offer services – including personal loans and bank accounts backed by a deposit guarantee scheme – to its Irish customers.

Revolut secured a $33 billion valuation in a funding round led by SoftBank in 2021. However, investors including Dublin-listed Molten Ventures and Schroders have since adjusted their implied internal valuations for the start-up, with Schroders putting it as low as $18 billion at the end of 2022, before revising it up to $26 billion as of the end of December 2023.

The company must persuade investors that it can deliver sustainable profitability after it posted a £25 million pre-tax loss for 2022 — the latest available results — a year after turning a £40mn pre-tax profit off the back of a boom in cryptocurrency trading.

Rupak Ghose, a fintech consultant and former financials research analyst at Credit Suisse, said Revolut was rarely used as a primary bank account despite its fast growth and would need to become a lender to build a large and sustainable revenue stream.

“To monetise ancillary revenue streams like Amazon.com did with advertising you would need real deep daily customer engagement,” he said. “Despite all the noise from tech investors, a superapp strategy in banking has rarely worked, with the exception of China,” he added.

It has been more than three years since the London-based fintech applied for a UK banking licence. They are typically granted within a year, UK regulatory guidance says. Securing a licence is crucial to Revolut’s ambitions to roll out lending on a wider scale in its home market and boost its profitability.

Mr Le Nel said advertisers and distributors had already shown interest in partnering with the fintech, which is running internal tests for targeted advertising and has been in talks to sell advertising space on its app to brands. He anticipated they would become “more and more interested” the more Revolut could increase the time users spent on its app. “We want people to have a daily routine: you check your Instagram, you check your emails and you check your Revolut,” Mr Le Nel said. “We want to be part of your daily routine.”

The company has taken other steps to diversify away from banking, launching a mobile phone e-SIM earlier this year which customers can use to get mobile data when they are travelling. Revolut also generates revenue from payments, subscriptions, foreign exchange and its wealth division which includes crypto trading, according to its latest annual filing.

Copyright The Financial Times Limited 2024