Revolut, the international banking alternative, seems to have run into a rough patch.
Client acquisition has levelled off since February, well-before the worst of the crisis hit. Consumer spending is also dropping, although some of this can be attributed to lockdown and economic worries.
Revolut announced on 13 May that it had about 1 million users in Ireland. However, the company did not disclose how many used the free version of the app. These customers have seen their foreign exchange fees double since signing up.
Finance expert Daragh Cassidy, of price comparison site Bonkers.ie, warned of more fee rises. “The announcement is likely to disappoint customers and could be the first of many.” Revolut is good at raising funds, but so far not good at making a profit, he noted. The company is valued at $5.5 billion.
One key issue is customer service. Customer service, which experts say is the key to continued success in providing retail financial services, is very varied in quality, according to industry observers.
In January, customers of Revolut threatened the digital bank with legal action for leaving them for months without access to their savings. Dozens of people have complained on social media of having had their accounts frozen by Revolut and being unable to contact the bank to unlock their funds, the Telegraph reported.
Some question whether Revolut’s extremely rapid growth has been well-managed, in terms of customer service.
“When companies grow to behemoth levels, it is an unfortunate bi-product that customer service lessens. And this almost always has a negative effect on customer retention,” comments Andrew Anastasiou, CEO of the Cyprus-based payments specialist WireWallet.
“When employee happiness and security come into question, the next step is an adverse online representation and negative publicity regardless of the truth behind it, and this can have a serious effect on a service providers branding,” he adds.
Bad publicity hit the company when Wired magazine published reports that employees were being forced to resign. The company has also asked some employees to accept shares in lieu of salary. There is another report in Wired that candidates for employment were asked to recruit customers for free before being hired.
It is strange, though that Revolut should be dropping employees, because the company has raised at least $750 million in the past year. “We’re cash rich,” Revolut Founder and CEO Nikolay Storonsky told the Financial Times on May 5, and he outlined plans to expand the business.
True, Revolut has never reported a profit, but the fund raising reportedly provided cash for expansion — this, at a time when employees are being dropped? We don’t know much about the company’s finances, as the last report is from 2018, when they lost £32.8 million ($40.3 million) on revenue of £58.2 million for 2018.
Revolut has been good at recruiting customers, and good at raising funds. Whether it will stabilise as a company that earns dividends for shareholders still remains to be seen.