The surge in the adoption of digital financial services in India after the pandemic has attracted another global fintech player to the country. The UK’s Revolut, which entered the country in April last year, plans to take on companies from banks to new-age fintechs by bringing in its whole host of offerings to India.
Revolut bagged $800 million in funding led by Tiger Global and SoftBank in July last year, which valued the startup at $33 billion. Of the $800 million, Revolut has set aside $45 million as an initial investment in India and plans to hire 300 employees by the end of 2022 to serve the Indian and Asia Pacific markets.
Founded in 2015 by Nikolay Storonsky and Vlad Yatsenko, the company provides a range of financial services globally including payments, transfers, investment and trading, payment gateways, digital banking and debit cards.
Paroma Chatterjee, brought in by Revolut as CEO for India in April, is spearheading the company’s plans in a market that on the one hand has scope for the growth of digital financial services, but on the other, is crowded with banks and fintechs. Chatterjee detailed the British fintech’s expansion and hiring plans for India in an interview with Moneycontrol. Edited excerpts:
What have been Revolut’s first few steps since entering India last year and what will we see next?
India is one of the biggest countries to have a meaningful presence towards our ambition of becoming a true global fintech digital banking leader. With that backdrop, the first step we took was to incorporate a wholly-owned India entity, which we did in April 2021. We operationalised that entity by July last year.
The second thing, which is one of the topmost things on my and the company's priority list, is to hire the topmost talent that is available in India. We are bringing in people for all the different functions needed to build, launch and scale different businesses and product lines within India. That includes everything from operations, product, finance, legal, HR, compliance and regulatory.
The third thing we did was we dived deep into the market to understand the financial and technological needs of consumers across segments so that we can ‘Make for India.’ We looked into the needs of consumers, starting from teenagers all the way to senior citizens. And then geographically, starting from tier-I metros all the way to a small 2,000-population village where there is internet penetration, to look at what is working for them as well as what their gaps are in terms of adopting financial services.
Then we looked at our entire suite of products and which of those can we bring into India to be able to make a meaningful difference. The fifth thing to look at is if we have to build those products, what are the licences and regulatory requirements that we need to fulfil.
The other thing that we started building is literally the first product and engineering hub outside of the UK, which also shows you how bullish Revolut is about the kind of talent that’s available in India and the ability to build out in India. We have our own tech stack here on which we’re building not just for India based on the data localisation norms, but also building for other countries in the Asia Pacific region.
India is seeing a tech talent hiring war and very high salaries for techies since the past year. Many companies are doing the opposite of what you are doing with the product and engineering hub – they are hiring from other companies because that is cheaper. How are costs panning out for that and what is your target for hiring here?
As a company, we don’t want to cut corners on paying people. We are okay to pay for the best talent. Therefore, we are bullish on India because we believe that a lot of the really high quality talent is available in India. Secondly, why someone will work for somebody goes beyond the immediate cash pay cheque. We are looking to hire around 300 employees by the end of this year.
What we are realising is that people want to work for the Revolut brand. The opportunity to build and create something differentiated and meaningful is something that attracts some of the brightest ones. All said and done, we do not compete on quality at all – we literally hire the best person. One of the things that it has enabled us to do by launching during the COVID times is we have worked 100 percent remotely. So we could hire the best person for the job regardless of where they’re from. We have the same insurance benefits for all, and there is also a wealth creation opportunity in the form of ESOPs.
What is the total investment that will be made in the Indian market and by how much will your employee base grow further?
The 300 employees number is a starting number for us. It will be onwards and upwards from there based on our product and geographical expansion plans. As far as the investment is concerned, we have a Rs 340 crore (over $45 million) initial tranche.
How much will the investment be beyond that over the next few years?
The $800 million fundraise was mainly to fund the global expansion strategy. So the money is on tap. This is the initial round that is already in. But we have assurance that money will be available as and when needed. Revolut is committed to being in India for the long run and investing whatever is required.
Tell us about your product launch plans. Which financial services will you start with and how will the offerings grow?
The way we have planned out the roadmap is to initially launch with cross-border remittances because that’s where we bring in the differentiation, as well as domestic remittances. We will have a borderless remittance solution plus payments in the form of cards that will be issued through the app.
Post that we will get into trading and investments, which is the next fastest-growing segment in India as well as globally. The differentiation we can bring in there is to allow Indians to invest in foreign stocks. Then, we will evolve into offering credit for the retail as well as business-to-business segment. Once we have managed to make a meaningful presence in these verticals, then it will be a logical step to take a leap into forming a full-fledged digital bank.
We have already started working with the RBI on the discussion paper released by the Niti Aayog on digital banking. We definitely want to be at the forefront of partnering with RBI as we evolve. We have tremendous learnings from digital banking in various countries to be able to bring that knowledge in. Otherwise, there is always the option for us to passport one of our global banking licences to India.
So what licences will you be eyeing?
So the licence plans are in tandem with the sequence of products we intend to launch in India.
Is there a timeline for when your first few products will come out? Is there any target in terms of customer acquisition?
You will likely see us in the market in the second half of this year. In terms of customers, India can very well become the No. 1 market for Revolut in terms of the number of customers we will contribute to.
You will compete with startups in the fintech space as well as banks and foreign financial services players. How big a challenge is the competition?
I have been at the cusp of the fintech revolution in India from a decade ago, starting with the first mobile wallet licence to be granted in India till now. But I still think we have just scratched the surface. So even now, while we managed to put wallets in a lot of phones, to bring all financial services in a customised form based on the needs of every individual is where it can get to. I think it’ll evolve in that direction and people who are able to make that happen are the ones who are eventually going to stay.
If you look at it product by product, yes there is competition. But we don’t look at it ourselves as individual products. We actually look at ourselves as the financial super-app or a one-stop shop. So it is about making the app feel like it adds value at a consolidated level rather than competing for each product line individually.
In terms of a super-app as well, India has many payment and financial service players. How do you see that as competition? How will you ensure that people take notice of a new super-app?
If you look at the Indian ecosystem, you have the traditional banks and financial services companies who have a digital presence in the form of their website or their app. Then you have neo-banks, where the product is still the bank’s. The neo-banks put a layer on top of it, which is technology driven, but the products still belong to the bank. And then you have a third fintech ecosystem where there are specialists in various competencies.
We sit among all three. We build our own banking products, which is where we’re looking at the licences. It is our products that are delivering. So it is actually a branchless bank on your phone. Being a branchless bank offering borderless transactions is going to be a unique proposition.
The third differentiation is going to be in consumer experience. In India, it is basically the traditional financial user experience translated to an online form. The experience on the Revolut app is not like anything that you’ve seen in the fintech ecosystem and will really actually enable you to track the progress of your money.
Will you explore any acquisitions in the Indian fintech space? What areas will you look at? And will you look at any partnerships in lending or prefer to lend from your own book?
We prefer to do as much as we can from our own books. On acquisitions, we don’t want to say anything at this point. We have enough funds, which puts us in a position where we have different options to evaluate.
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