European unicorn Revolut finally shows up to the Aussie neobank race

Revolut prepaid credit cards. Source: Revolut's Twitter page.

European neobank Revolut is rolling out its beta service in Australia, shaking up the challenger-bank battle Down Under.

Founded in 2015 by Nikolay Storonsky and Vlad Yatsenko, the digital bank was one of the first movers in the space in Europe.

The London-headquartered startup has raised about $336.4 million to date and, according to a Forbes article, it’s valued at about $1.7 billion.

In Europe, Revolut has almost five million users.

The challenger bank announced it would be rolling out in Australia back in 2018.

Now, it’s starting a gradual rollout of its beta prepaid credit card product, starting with its waiting list of 20,000 Aussies.

In a statement, Revolut said its Australian HQ would be in Melbourne, calling the city “a centre for fintech innovation and talent”.

It will also create 30 jobs by next year, and “will be investing millions of dollars into the Australian economy”, the statement says.

Although Revolut has a banking licence from the European Central Bank, the European challenger can’t claim to be a bank in Australia just yet. So, currently, it’s operating as an “electronic money institution”, the statement says.

There’s no mention in the release as to whether Revolut is in the process of applying for a banking licence in Australia, or if it plans to.

“We don’t intend to rush things here,” it says.

The bank did, however, liken the Aussie expansion to launching a whole new startup.

“The fact is, no two regions or countries are ever the same, which is why we describe our Australia launch as like building a startup, within a startup.”

According to Revolut, the initial beta product will include instant spending notifications and budgeting and saving tools, as well as free overseas spending.

However, what may set it apart from its Aussie competitors is the $10.99-per-month premium account, which allows users to send and receive money from European account holders instantly and for free.

In Australia, there are several neobanks vying to bring the first full-blown consumer banking products to market.

In January, Volt became the first Aussie challenger to be granted a full authorised deposit-taking institution (ADI) licence, however, it still doesn’t have any products out in the market.

Speaking to StartupSmart last week, Volt co-founder Steve Weston said while getting a product out to market is a “key priority”, the startup is focusing on perfecting its offering, and working with prospective customers to understand what they really want, before it launches.

“We’re building our waiting list off the back of the co-creation approach,” Weston said.

“Those people who have helped us do that become our initial customers, they become our test group, and really importantly they become our advocates to tell others.”

On the other hand, Xinja has released its prepaid credit card product, but is still waiting for its full ADI.

The competitor received its restricted ADI licence last year, and founder Eric Wilson believes the full licence is not too far off.

“I’m absolutely hopeful it will be well before the end of the year,” he told StartupSmart last week.

Australia has also seen the launch of Up, a neobank fully backed by Bendigo Bank and therefore able to avoid the onerous process of securing regulatory approvals.

Challenger 86 400, backed by payments solution provider Cuscal, has also pledged to take the fight to the big four, and is currently in the process of raising $250 million in new funding.

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