Revolut’s India grand plans still on shelf three years on

With over 35 million customers globally and backing from investors such as Tiger Global and SoftBank, neobank Revolut’s entry in India in 2021 was touted as a game-changer.

Its entry was expected to challenge the triopoly of Paytm, Walmart-owned PhonePe and Google Pay, which then processed over 93 percent of transactions on the Unified Payments Interface, a platform that enables instant fund transfers between bank accounts.

Revolut also planned to introduce an international app in the burgeoning Indian digital financial services market. The idea was to start with payments (remittances), its flagship global offering, followed by trading, investment and credit. The fintech brought in former Lendingkart and Flipkart executive Paroma Chatterjee to lead India operations.

Three years on though, Europe’s largest neobank, which entered with a coffer of $45 million (Rs 320 crore), is yet to make a big ‘financial super app’ splash. Its application for licences to operate digital payments remains stuck, a senior executive who used to deal with the company’s operations told Moneycontrol.

“Even we didn’t know for three years when the launch would happen. Big plans were discussed every quarter,” the executive said.

Travel card

Revolut is now said to be working to launch a travel card by April, similar to the one offered by fintech companies Scapia and Niyo Global and some larger banks.

That’s quite a comedown from 2021, when India was part of Revolut’s global expansion plans. Having bagged $800 million in funding from investors led by Tiger Global and SoftBank in 2020, valuing the startup at $33 billion, $45 million was set aside for India.

“Revolut is making a multi-million-pound investment in India over the next five years and has committed to the creation of circa 300 new jobs in the country to serve its global business operations,” it said in a press release in 2021.

The company operates two entities in India – Revolut Payments and Revolut Technologies. The latter serves as a backend hub for Revolut’s global business, including South East Asia, employing about 2,000 workers.

A small part of the staff, including the senior management, is based in Bengaluru and dedicated to building the India business.

However, Revolut’s product development for India takes place in the London head office. The Revolut India team did not confirm the development or timeline of the travel card launch.

“Our product is already live with our employees (in internal testing) and we plan to launch externally once we have the product fully tested,” the company told Moneycontrol.

The travel card, according to one person, will be launched via Arvog Forex, a Mumbai-based company that Revolut acquired in February 2022.

Licence status
Currently, Revolut does not hold a prepaid payment instrument licence or a third party application provider licence required to enable wallet, payment or UPI services. The company did not comment on the status of its applications and said it is engaging with the RBI.

With the acquisition of Arvog Forex, Revolut got the authorised dealer (AD-II) licence required to offer forex services to Indian customers. Additionally, the company claims to have received authorisation to facilitate remittances.

“We were told every quarter that the launch of the super app will happen. There are days when we have no work. One-third of the funding raised goes into salaries. It’s a larger leadership problem,” a former executive alleged, adding that the majority of the team works under the hybrid model.

In addition to the licence, the global firm must adhere to data localisation norms, for which it claims to have made an upfront investment.

“We undertook the massive task and made the upfront investment to localise our entire global tech-stack to comply with local regulations. This has now been fully completed, setting the stage for Revolut to launch in India,” the company said.

Leadership churn

Revolut’s India plans have also faced a leadership churn. CFO Arjun Mehta resigned in January this year to join edtech firm LeverageEdu. Head of compliance Atul Gupta left in April last year to join Cashfree.

This was followed by the exit of CTO Saleem Hala, who quit five months ago to join Saudi fintech Hala. Legal head Om Prakash Pandey stepped down in 2022-end and the position has remained vacant.

At the same time, some new appointments were made. The company roped in former Jio senior executive Abhishek Padhy as product lead, and former Flipkart executive Sandeep Nainwal as head of people.

Global challenges

The Nikolay Storonsky and Vlad Yatsenko-founded fintech started in 2015 as a pre-paid card firm offering currency exchange. It has now expanded to almost 50 products and services including rentals, buy now pay later, money transfers, bond trading, and crypto, serving over 35 million customers in 38 countries.

Since the announcement of its global expansion plans in 2021, Revolut has had a hefty task list on its hands. In 2023, it launched financial services in New Zealand, set foot in Brazil and is now working on getting a banking licence in Australia and launching new products in Singapore.

The British fintech company has been trying to get a banking licence in its homeland since 2021. According to The Guardian, UK regulators have had reputational issues to consider, with the fintech company facing criticism for EU regulatory breaches, its corporate culture, and late filing of accounts.

Besides, it has a legal tussle with insurance giant Allianz, which sued it for $13 million over a travel insurance deal. Last week, the neobank was slapped with another lawsuit in Illinois over alleged unlawful biometric data collection.

“The global firm has a lot on its plate right now with other markets, new features, licences, and India has been put on the back burner. They are sort of stuck because they can’t retreat as it may leave a bad impression on investors and nor are they in a position to launch as there is nothing concrete built over the past three years,” a senior executive working in a similar space said.

The global expansion plans and a hiring spree across markets sent the fintech back into losses in 2022 after reporting its first pre-tax profit of $50 million a year earlier.

Revolut was hit with a $32 million loss in 2022 as its global headcount rose to more than 8,000 people, with employee costs surging besides higher administrative, marketing, legal and advisory expenses.

The senior executive cited earlier said investors pulled back about 25 percent of the $45 million invested initially to infuse into other market operations. Moneycontrol has asked Revolut about this, but hasn’t got a response yet.

Once credited as the UK’s most valuable fintech, Revolut’s valuation has been written down by investors to $18 billion from $33 billion in 2021.