Revolut, a digital-only banking service provider, isn’t too worried about its staggering fiscal year 2018 losses. The company reported a loss of £32.8 million for the period against £58.2 million in revenue.
The UK-based company took a large hit from skyrocketing cost of sales, which increased 247%. The jump is attributed to significantly higher user acquisition costs and mounting card scheme fees (which are not publicly disclosed or regulated).
Despite the financial woes, Revolut believe its fortunes are turning the corner. The firm has announced plans to hire an additional 3,500 staff, bringing the headcount to 5,000. This comes alongside plans to expand into 24 new territories.
Revolut currently operates online in Europe and Australia. However, the growth plan sees it entering the United States and Singapore before the end of this year. Canada and Japan will follow shortly after, but Revolut still requires regulatory approvals in its expansion territories.
The company has a non-exclusive arrangement with Visa, and 75% of the company’s 8 million customers carry a card with that provider’s logo. The planned expansion would see the banking company double (or possibly triple) its customer base in relatively short order. While it’s still considered a small fish when compared to major multinational banking organizations, it boasts a deposit base of €8 million, with average customers maintaining a balance of about €1,000.
The company, headed by CEO Nikolay Storonsky, has been subject to UK financial watchdog scrutiny. The group investigated whether Revolut has complied with financial sanction checking procedures. Customers have also been lukewarm on the company. The benefit of avoiding foriegn transaction fees is balanced by a lack of access to a phone number and online online chat for service support. This has made fraud complaints and recovery especially hard for some.
Storonsky says he and Revolut have learned much in the three years they’ve been operating. Whether this expansion heralds a new era for Revolut’s customer service or an explosion of growth depends on where Storonsky and his team prioritize investment.