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Comment by cosmodisk | Hacker News Reader

Revolut is where WeWork was a few years ago. Eventually a few guys will make some nice money and the whole thing will go down the drain. VC money is nice, however at some point you need to start making your own money and how they are planning to do so is a question nobody has an answer to.

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It feels like they are going the traditional bank route, give away a basic product and charge fees for everything over a threshold.

Looking at their business pricing page, it looks like they are going to get into commercial lending, which could prove profitable. I don't know if it is VC-scale, though.

Most big, successful banks that have withstood the test of time have grown VERY slowly over nearly 200 years and acquired a lot of local banks along the way.

I don't recall all of the numbers but my brother (a small-town-bank vp) told me not that long ago that most small town banks will profit between $1M and $5M per year (5-10% return on equity). A small bank will usually have a few thousand customers.

So if Revolut has 10M customers (2000x bigger than a small town bank), and the customers are using Revolut like they would their small town banks, they should be profitable at some point.

It's one thing to get high growth among millennials with a shiny app and completely another to get into commercial banking.The reason why majority of the banks rather do mortgage and some other 'easier' products is because of how difficult and complex commercial lending is. I don't think it's fair to compare a local town bank in the US to challenger bank in Europe. I suspect a very high percentage of revolut accounts were opened purely to support alternative banking, however these customers aren't and won't be the ones that will bring fortunes to the bank's coffers.

I agree, which is why I'm saying that I don't think that Revolut can be a VC-scale commercial bank. But I do believe it will be profitable if they can convince their users to use it as an actual bank, and not just a novelty app and debit card.

You could say the same about Transferwise. Revolut is setting themselves up as a bank for millenials/gen Z. It is light years ahead of traditional banks in terms of user experience. Banks are a proven way of making money.

> It is light years ahead of traditional banks in terms of user experience.

Their app experience is mostly stellar, but I wouldn't say the same of their support, and the fear that one's account would be locked because they hit some undisclosed limit.

I haven't had to deal with TransferWise's support yet, but I've heard that it's one of the "better" ones.

Any bank account can be locked at any time because an algorithm disagrees with you, traditional or online. That's just the reality of banking, especially in the post-HSBC scandal era. I wouldn't keep my savings in Revolut for sure, but it's not really designed for that.

If you pay for the premium/metal plan, the support is stellar as well (or at least, it has been for me)

Transferwise though is not playing the free game. They charge you fees and they have been profitable for three years now. https://transferwise.com/gb/blog/annualreport2019

"It is light years ahead of traditional banks in terms of user experience."

Show me a proper US bank that doesn't care that it's "Presidents Day" or "Labor Day" or "Sunday" (since nobody else does) and let's me conduct proper business 365 days per year - then we can talk about user experience ...

I am annoyed and amused (mostly annoyed) that I am using a global internet to access remote banking that credits bank transfers using a (literal) horse and buggy clearing timetable.

What is funnier still is I have tried to transfer from one Wells Fargo account to another Wells Fargo account, and it still took 3 days to deposit (of course, they took it from me immediately).

The difference is the industry, and that counts.

Wework was silly because real estate is not software. The profits needed to eventually justify all that "burn-to-grow" money was never possible regardless of scale.

It's not an AdWords Vs Yahoo ads situation. The market leader isn't taking all the profits.

Banking isn't software either, but banking is banking... It's where the money is, lol.

Seriously, financial services is rich, rich pickings... Insurance, lending, business accounts, transfers....

A bank with low operating costs and millions of employees is worth a lot.

If it was a truly American company, I suspect the market cap would be way higher... UK investors are more cautious, and the company is a little dicey

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