Revolut’s US Credit Card Strategy Puts NeoBank Up Against New Challengers
In its bid to make more inroads into the United States and to differentiate itself from its digital banking peers, the U.K.’s Revolut is setting out to offer credit across the pond.
As reported on Monday (Aug. 30) across sites including the Financial News, the card could come by the end of the year. Revolut already has credit offerings in some markets in the EU. Ron Oliveira, the company’s U.S. CEO, said the company will offer an unsecured line of credit and credit cards.
With that launch publicly stated and given a timeline, the move by Revolut does a few things. First, it adds on to other actions Revolut is taking in the States. And all of this comes on top of its pending listing, via IPO, on U.S. exchanges. So, in other words, the success (or challenges) in the U.S. will be quickly reflected in stock prices.
As for the U.S., in one recent example, Revolut said over the summer that it is establishing a payment corridor for the U.S. and Mexico to facilitate easier money movement of funds between the two countries.
See also: Revolut Introduces Payment Corridor for US-Mexico Money Transfers
And it’s been laying the groundwork for a full-fledged presence in the U.S., where earlier this year Revolut said it would begin operating in all 50 states, having submitted a draft application for an American banking license.
Also read: Revolut Expands Digital Banking Services in the US
If past is prologue, recent product launches in the U.K. may hint as to what’s to come down the line. Last month, Revolut said it was partnering with employers in the U.K. to offer early wage access through its Payday offering.
Learn more: Revolut Intros Payday Early Wage Access for UK
The envisioned launch of a credit card product and unsecured LOCs puts Revolut up more squarely against companies that, through acquisitions or banking license apps, are bringing traditional banking services and offerings into a digital continuum – which, notably, includes credit products. Among the most visible competitors is LendingClub, which bought Radius Bank (the deal closed in early 2021) and has been gearing up to offer cross-functionality across a range of activities, from debit to credit.
More details: LendingClub CEO Heralds ‘Transformative’ Radius Bank Buy
In a few examples that have been noted in PYMNTS coverage, credit card debt could be converted to loans to be paid down over time, and rewards tied to debit spend could be used to pay down those loans. Varo Bank has launched a program to help individuals build or improve their credit scores, and has also developed a card with Visa that is linked to checking accounts.
See also: Varo Bank Launches Visa Program To Help People Build Credit
And, though not a digital pure-play but a banking stalwart that wants sizable presence in digital channels, Goldman Sachs has been building up its consumer/retail operations. In its last earnings report, Goldman reported a 41 percent surge in consumer banking revenues as card balances grew (and the firm has signaled its intent to build its card presence and its Marcus offering).
Related news: Goldman Sees 41 Pct Surge in Consumer Banking Revenues
Interest in Digital Cards
The interest for digital credit offerings is there: PYMNTS research has found that as many as 28 million consumers without digital cards would be interested in them. Roughly 41 percent of consumers have digital cards in their digital wallets, which signals some room for growth.
You may also like: 28M US Consumers Without Digital Cards Are Interested in Them
But the field for digital banking is crowded. Separate PYMNTS research has shown that Revolut is within the top four brands, as determined by its the Provider Rankings – so certainly, the company has some mind-share where it operates, though the challenge is there as it pushes into the U.S.
More details: PYMNTS Provider Rankings