Tag: banking

  • Is Revolut worth US$200 billion?

    Is Revolut worth US$200 billion?

    Is Revolut worth nearly as much as Citigroup or American Express? Both of those financial firms have market capitalizations that exceed US$200 billion. They also have annual revenue of US$85.2 billion and US$72.2 billion respectively. Revolut posted US$6 billion in revenue last year.

    Yet, the UK fintech unicorn is not letting something like modest revenue stand in the way of a blockbuster IPO, which is now planned for 2028. An April 21 Financial Times report, quoting a Revolut source, said that the company is targeting an IPO valuation of US$150 billion to $200 billion – which is double to 2.7x its current US$75 billion valuation. 

    To be sure, Revolut’s business is growing at a steady clip. Revenue rose 46% last year, while pre-tax profit jumped 57% to US$2.28 billion. Customer balances increased 66% to $67.5 billion, while the company’s user base grew to 68.3 million retail customers and 767,000 business customers. Revolut operates in over 40 markets, with licensed banking operations in 30+ countries, including Mexico and Colombia.

    It is difficult to assess how reasonable Revolut’s IPO valuation target is because there are not many large digital banks that trade in public markets. Brazil’s Nubank, which is the largest pure-play online lender in the world, has a market capitalization of about US$70 billion. Nubank posted a record-breaking US$16.3 billion in revenue last year, with net income of US$2.9 billion. 

    Revolut’s business is considerably smaller than Nubank’s, yet the UK firm is targeting an IPO in two years that would value it at more than double the Brazilian company’s valuation and the higher end, almost triple. 

    The UK firm’s backers might say that it is positioned to become a dominant banking force in Europe. On the one hand, the company recently was granted a full UK banking license, which allows it to offer full current accounts, loans, and credit products to its 13 million UK customers, with deposits protected by the FSCS up to £120,000. 

    On the other, it is expanding aggressively in continental Europe. Some analysts see rapid growth in markets such as France, Italy, and Spain as evidence that the UK fintech is increasingly being used as a primary, rather than secondary bank account. In Europe, about one in five working-age adults now uses Revolut. 

    While the UK company’s prospects in Europe look good, its ability to justify a sky-high IPO valuation will depend largely on if it can crack the U.S. market. Revolut has been operating in the U.S. since March 2020 as a fintech company in partnership with American banks. While the company boasts about its 1 million U.S. users and the US$500 million it has invested in the country, the reality is that its current American business is small potatoes. One way or another, it needs to become a full-fledged bank to make that investment pay off.

    With its own license to operate in the United States, Revolut would be able to start taking insured customer deposits. That would make it easier for the company to offer lending products like its own credit cards, which it sees as crucial for gaining American customers. To offer those right now, it would have to borrow from the capital markets. With a banking charter, Revolut would also gain access to payment systems such as Fedwire and A.C.H.

    Will Revolut succeed where other digital banks (like its competitor Monzo) have failed? 

    Revolut seems confident: The company is betting on the U.S. regulatory environment being favorable to its application for a standalone charter. 

    This seems risky to us given that the UK firm has a checkered compliance history. And unlike Mexico—where Revolut did recently acquire a full banking license—the U.S. market doesn’t really need another flashy digital bank.

  • Starling Bank mulls next big steps

    Starling Bank mulls next big steps

    Technology forward with a lean cost structure and known for being customer centric, Starling Bank is one of the most successful UK digital lenders. It has operated as a licensed bank in the U.K. since 2018 with shareholders that include Goldman Sachs, Fidelity Investments and the Qatar Investment Authority. 

    In the fiscal year ended March 31, 2025, Starling Bank posted a profit of US$301.9 million on revenue of US$963.4 million.While that is an enviable performance by the standard of most fintech startups, for Starling Bank it was a bit of a disappointment. The company’s net income fell 26% annually because of a Covid-era business loan fraud issue and a regulatory fine over financial crime failings. Revenue grew 5%, but that was a significant slowdown from the 50% expansion rate in Starling’s 2024 fiscal year.

    Never as audacious as competitors like Revolut and, to a lesser degree, Monzo, Starling still faces the reality of being an 11-year-old fintech startup long past the go-go days in private markets. Investors want Starling Bank to show them the exit ramp—and for this reason, the company has reportedly engaged investment banks, including Morgan Stanley and Rothschild, to explore options for a sale, targeting a potential valuation of up to £4 billion.

    Though Starling Bank is a UK company whose largest business is in its home market, we would not be surprised if it were to eschew the London Stock Exchange (LSE) and instead go public in the United States. To be sure, a New York Stock Exchange (NYSE) listing—which we consider the likeliest destination for the offering—would signal a change in direction from what former interim CEO John Mountain said in 2024. At the time, Mountain said that London was the “natural home” for Starling, and he even emphasized that the company was not “considering other markets” for its market debut.

    That was then. Now, Starling Bank is leaning towards a U.S. listing. The UK digital lender’s CFO, Declan Ferguson, told the Financial Times in July that while no decision had been made on where the bank would list, it was a U.S. IPO. “We continue to observe what is happening externally with our peers and also what is happening on the global stage in terms of the UK versus US [stock markets],” he said.

    One reason for Starling Bank to go public in the U.S. would be to achieve a higher valuation than it could on the LSE. The U.S. IPO market benefits from bigger size, greater investor sophistication regarding technology stocks, and higher valuation multiples. UK fintechs often feel they are valued more like traditional banks in London, whereas in the U.S., they might be valued as high-growth technology platforms.

    At the same time, the U.S. has a much larger financial services market than the UK that, despite its fragmented nature, offers Starling significant opportunities. Starling’s management reckons that its cloud-native technology platform (Engine) could be a key differentiator in the massive U.S. banking market, especially when it comes to its thousands of mid-tier and community banks.

    To that end, Starling is also likely to expand in the U.S. prior to its IPO and has reportedly looked at acquiring a U.S. bank. If the UK digital lender can acquire a traditional U.S. bank, it will avoid the regulatory morass that would be guaranteed if it independently applied for a U.S. banking license. Further, an acquisition would give Starling Bank instant infrastructure and deposits in the American market, as well as an immediate opportunity to deploy Engine.

    If the UK neobank finds an attractive M&A target, we expect it would move to make the deal in the first half of 2026 and help pave the way for an NYSE IPO, perhaps in the second half of the year.

  • Why Mizuho took a majority stake in India’s Avendus

    Why Mizuho took a majority stake in India’s Avendus

    Japan’s financial heavyweights like Mizuho, MUFG and Sumitomo Mitsui are increasingly looking for more promising banking opportunities overseas as growth in their home market is flat given a legacy of ultra-low interest rates, deflation, heavy corporate cash holdings stifling investment, and a shrinking population.

    India has emerged as a preferred market for Japanese financial firms. The subcontinent boasts strong economic fundamentals, a young and large population with rising incomes, rapid digital adoption, and a burgeoning fintech sector. At the same time, to attract needed capital and international financial expertise, Indian regulators have loosened some restrictions on foreign investment.

    It is against this backdrop that Japan’s Mizuho Securities—which is part of the third-largest banking group in Japan, Mizuho Financial Group—recently announced its intention to buy 61.6% to 78.3% of shares in KKR-backed Indian investment bank Avendus for up to 81 billion yen (US$523 million). KKR affiliate Redpoint Investments Pte Ltd. is selling the stake to Mizuho Securities. Ranu Vohra, co-founder and executive vice chairman of Avendus, will also be liquidating his stake as part of the deal.

    Following the closing of the deal, which is expected in July 2026, Gaurav Deepak and Kaushal Aggarwal will continue to lead Avendus. “Together, we look forward to bringing innovative capital solutions to the Indian ecosystem and leveraging our complementary strengths to create deeper financial and economic flows between India and Japan,” Deepak said in a statement.

    For his part, Aggarwal said, “With India entering a transformative economic phase, we see immense potential to scale with purpose, innovate across sectors, and build a platform that consistently delivers impact in India and beyond.”

    The successful tie-up comes after Mizuho’s efforts to buy a majority stake in Avendus previously hit a roadblock. In September, India’s Economic Times reported that talks hit a snag due to disagreements on valuation and the right exit option for the KKR portfolio company.

    Mizuho emerged as the frontrunner for KKR’s 63% stake in Avendus, which valued the firm at about $800 million, according to Bloomberg. Other bidders for Avendus included Nomura Holdings Inc. and Carlyle Group Inc.

    The Mizuho-Avendus tie-up is the second major investment the Japanese lender has made in an Indian entity since early 2024. The first involved Mizuho taking a 15% stake in the non-banking financial company Credit Saison (CS) India with an investment of US$145 million. CS India subsequently secured External Commercial Borrowing (ECB) funding of US$145 million from Mizuho. The equity stake marked Mizuho Bank’s strategic entry into the Indian market.

    The Avendus deal follows Sumitomo Mitsui Financial Group’s purchase in September of a 20% stake in Yes Bank for about 135 billion rupees (US$1.6 billion) from State Bank of India (SBI). This strategic investment provides capital for Yes Bank and an exit for SBI from its 2020 rescue role. SMBC aims to support Yes Bank’s growth and transformation, benefiting from global expertise, while Yes Bank gains a strategic partner. SBI’s stake decreased to around 10%, and other original investors also reduced their holdings, allowing SMBC to become the largest shareholder.

    The infusion of capital and global banking expertise is crucial for Yes Bank’s continued recovery and growth after its 2020 financial crisis, while offering SBI a profitable exit for its investment.

    Looking ahead, we expect that heavyweight Japanese banks will continue looking for Indian investment opportunities in 2026 and beyond. Overseas expansion has become essential for Japanese megabanks to achieve scale and higher returns unavailable domestically.

    Among emerging markets, India stands out for Japanese lenders. The subcontinent’s expanding middle class and policy emphasis on financial inclusion create sustained demand for credit across retail, MSME, and corporate segments that will make its financial sector attractive for Japan’s largest financial groups for years to come.

  • Why Toss Bank had a stellar Q3

    Why Toss Bank had a stellar Q3

    Korean digital banks tend to be a cut above the industry standard, and Toss Bank is no exception. Leveraging the broader Toss super app’s 10 million monthly active users (MAU), the company has successfully integrated payments, stock trading, and lending, improving profitability and user engagement.

    While most tech companies outside China have struggled to build super apps, Toss has developed a digital financial services platform that checks many of the boxes. “When we launched our flagship money transfer service, it was loved by so many users, so we were able to grow very fast. We quickly realized that all the other vertical sectors of finance were not covered by other players,” Toss founder Lee Seung-gun told Fortune magazine in April. “There has been a huge void in the Korea market, so we were able to capture those opportunities.”

    As it heads toward a 2026 IPO in the United States (that of its parent company, Viva Republica), Toss is riding high, posting record earnings in the September quarter by focusing on both strategic growth and operational efficiency. Toss’s performance is all the more impressive when one considers some of its competitors are facing significant headwinds.

    The bank’s cumulative net profit in the September quarter was 81.4 billion won, an increase of 136% compared to the same period last year. Toss has sustained profitability for several consecutive quarters, signaling a stable growth trajectory.

    At the same time, its total customers now exceed 14 million. This expanding user base provides a strong foundation for various financial services within the Toss ecosystem.

    Toss Bank successfully grew both its interest and non-interest income in the third quarter. Non-interest income jumped 52% annually to 129.6 billion won, driven by an increased inflow of funds and growth in operating capabilities. Net interest margin (NIM) slightly increased to 2.56% from 2.49% a year earlier, indicating efficient management of interest-earning assets and interest-bearing liabilities.

    Additionally, Toss’s loan and deposit balances both experienced steady growth, suggesting effective liquidity management. The balance of loans was approximately 15.45 trillion won, while the deposit balance reached 30.4 trillion won. Despite an expansion of loans to mid-to-low credit borrowers (the highest proportion among internet-only lenders), the bank improved asset stability by increasing the proportion of guaranteed products like jeonse (housing rental deposit) loans and private business guarantee loans.

    Toss continues to broaden its product portfolio as well. In early December, it announced that it would soon (possibly by January) launch a service that allows direct foreign currency transfers to bank accounts in major overseas countries. Toss Bank plans to provide a “one-stop” service that allows customers to exchange, hold, and transfer foreign currency through a single platform. The currencies eligible for overseas transfers are expected to include the U.S. dollar (USD), euro (EUR), Canadian dollar (CAD), Australian dollar (AUD), Singapore dollar (SGD), Hong Kong dollar (HKD), and British pound (GBP).

    Looking ahead, Toss’s parent company, Viva Republica, will begin gearing up for its expected second quarter 2026 IPO. Viva Republica is eschewing a domestic listing in South Korea to seek a better valuation overseas. While the company seeks a valuation of more than US$10 billion, it could potentially be valued at more than $15 billion if market conditions are optimal. The deal is expected to raise between US$2 billion and US$3 billion.

    Viva Republica has the benefit of hindsight, having observed its competitor Kakao Bank rush to go public during the early 2020s pandemic-fueled tech boom, only to see its valuation plummet as investors in public markets had doubts about the inflated valuation pushed by Kakao and its heavyweight backers. To date, Kakao Bank’s share price has fallen more than 68% from its August 2021 market debut.

    While it is important to seize the day, good things come to those who wait.

  • Why is GXS Bank cutting 10% of its staff?

    Why is GXS Bank cutting 10% of its staff?

    One of the brightest ideas (or not) of Southeast Asia’s early 2020s tech bubble was centralizing every digital service imaginable in a single smartphone app, a barely veiled attempt to replicate the success that China’s dominant platform companies enjoyed with this business model. Unsurprisingly, the results have been inconclusive because China is a unique market and we are willing to bet that there will not be another Alipay or WeChat anywhere. 

    That’s a key reason that GXS Bank, the digital banking venture of Singapore-based erstwhile super app Grab (it doesn’t use that term so much anymore) and Singaporean telecoms giant Singtel faces a tough slog. How many people, ultimately, prefer to bank with the same company they use to book taxis and order pizza? Or their mobile phone service provider? Pure-play fintechs just seem more focused on, well, you know, financial services.

    There are other challenges that GXS Bank faces. Here are a few of them: high operating costs, low customer engagement (many accounts are inactive), intense competition from established banks with wider offerings, and the challenge of monetizing a saturated market in which most people already have bank accounts. GXS Bank faces pressure to scale, cut costs and move beyond basic savings to more profitable lending and investment products. Ultimately, GXS Bank must prove its viability against legacy banks that quickly match digital features.

    It is against that backdrop that the company recently slashed headcount by 10%. The decision to reduce headcount is part of the group’s transition from the early growth stages of building a bank to running the operations, GXS group chief executive Lai Pei-Si said in a note to staff. “The roles that are essential as we move forward and focus on running the bank may be different from our build phase,” said Lai.

    Lai said that after conducting a strategic review, GXS tried to “reshape” itself for a year and a half. She said that the digital lender has only backfilled vacated roles that it believes are essential for the group for the years ahead. It has also “regionalized” its core capabilities, such as data, product and technology, to “improve collaboration” and scale its product innovation across multiple markets. “However, the pace of organic reshaping has been slower than expected,” she said.

    A year ago, GXS Bank was still singing a triumphant tune. The company published a press release that emphasized it had 3 million customers across Southeast Asia, including Singapore (200,000 in the city-state), Malaysia and Indonesia. That sounds pretty good – until one considers that Indonesia has a population of 286 million and Malaysia 31.5 million. 2.8 million customers is less than 1% of the combined populations of those countries. 

    “We are well-positioned to grow our business and serve even more customers in the coming year. 2025 will be the year of significant scaling up for the digital banks in the GXS Group,” then Group CEO Muthukrishnan Ramaswami said. 

    Things have turned out a bit differently than that rosy prediction. Still, with Grab-Singtel’s deep pockets and Singaporean state backing, their digital banking ventures are in no danger of failing, even if Grab’s overall performance continues to disappoint investors. After all, this is a company whose stock price has fallen almost 60% since its Dec. 2021 market debut on the Nasdaq. 

    At some point, Grab will undoubtedly move from the red into the black, but will its digital banking subsidiaries live up to the hype surrounding them? In contrast to the Wall Street analysts cheerleading for Grab, we’re not so sure, especially when native digital competitors like Standard Chartered-backed Trust Bank seem to understand the banking business better.

  • Klarna hops on the stablecoin bandwagon 

    Klarna hops on the stablecoin bandwagon 

    If there was any doubt that the world is in the midst of a stablecoin craze – we hesitate to use that loaded term “bubble” – it should be dispelled by the recent launch of a stablecoin by buy now, pay later (BNPL) behemoth Klarna. 

    In a news release, Klarna explains its rationale for the issuance of KlarnaUSD, which is currently in a testing phase and will be available to the public on mainnet in 2026 – likely the middle of the year. Citing consultancy McKinsey, the Swedish fintech giant says that stablecoin transactions now exceed US$27 trillion a year and could overtake legacy payment networks before the end of the decade. 

    “With 114 million customers and $118 billion in annual GMV, Klarna has the scale to change payments globally: with Klarna’s scale and Tempo’s infrastructure, we can challenge old networks and make payments faster and cheaper for everyone,” Sebastian Siemiatkowski, co-founder and CEO of Klarna, said in the news release. Klarna is the first company to launch a stablecoin on Tempo, a new independent blockchain started by Stripe and Paradigm that’s purpose-built for payments. 

    We aren’t holding our breath for stablecoins to relegate legacy payment networks to the dustbin of history, but we can see why Klarna’s leadership is latching onto stablecoins at this moment. With its core BNPL product facing intensifying competition, Klarna needs new engines for growth now that it is a public company that has to stand up to widespread investor scrutiny. 

    After several years of delays, the Swedish company finally went public on the New York Stock Exchange (NYSE) in September at a valuation of US$15.1 billion, which is about 1/3 of what it was worth in private markets back in 2021. Although the IPO itself was considered successful, the company’s share price has dropped 33% since September as investors worry about Klarna’s ability to generate sustained profits. 

    While Klarna’s third-quarter revenue reached a record US$903 million, its net loss widened to $95 million. Klarna says that it posted a loss mainly due to a US$235 million provision for credit losses, an accounting requirement tied to the rapid growth of its expanding Fair Financing product.

    The U.S. is a key growth area for Klarna, but its credit loss rates are higher there than in its core European markets. This is partly because Klarna must compete more directly with traditional credit cards in the U.S., where its primary users tend to be consumers who need more time to pay.

    Launching a stablecoin does not fundamentally address the issues with Klarna’s current business model, but it could reduce the US$32.7 billion in cross-border fees the company pays, lowering its costs and allowing it to make faster payouts to merchants. 

    But will this be a gamechanger? 

    Maybe not. 

    Indeed, we are skeptical that stablecoins traveling on blockchain-based payment rails – Tempo’s or anyone else’s – are going to pose a serious challenge to the interbank messaging network SWIFT, which has significantly improved the speed of transactions in recent years. Currently, 75% of payments travelling over the SWIFT network reach beneficiary banks within just 10 minutes. The interbank messaging network does acknowledge that “more work is needed at the final stage of a payment’s journey—the last mile—to address friction that delays funds from being delivered to end beneficiaries.” 

    At the same time, stablecoins lack a single, globally accepted regulatory framework. Rules vary significantly by country, creating complexity and uncertainty for large institutions operating across multiple jurisdictions. SWIFT, on the other hand, operates within mature and well-understood legal frameworks.

    Sweden’s central bank notes that the use of stablecoins outside decentralized finance, for example for buying and selling of crypto-assets and use as collateral, is still limited but is growing rapidly in some areas. Whether this development will lead to wider use remains uncertain.

    Time will tell if Klarna’s stablecoin bet pays off. 

  • Why did GCash delay its IPO until H2 2026?

    Why did GCash delay its IPO until H2 2026?

    Ant Group-backed GCash, the most successful Philippine payments platform, has been eyeing an initial public offering (IPO) for several years. It achieved profitability in 2021, three years ahead of target. Having hit that milestone four years ago and boasting 94 million users, the company seems like it should be primed to go public.

    In fact, in June 2023, Ernest Cu, chairman of Mynt (the fintech firm that operates GCash), told Bloomberg that GCash was “pretty much ripe for it.” About a year later, he said, “We want to do it sooner rather than later. Sometime in 2025 would be the best estimate I can give you.”

    As it turns out, that estimate was overly optimistic. In late October, Bloomberg reported that GCash had decided to postpone its market debut until the second half of 2026. It is easy to see why: As of November 12, the Philippine stock market (PSEi) is down 10-11% year-to-date. On November 11, it hit a five-year nadir of 5,629.07. Investor pessimism has prevailed this year given global economic jitters linked to mercurial United States trade policy and a domestic corruption probe related to large-scale infrastructure projects.

    Some analysts believe the market may be near a bottom but emphasize that regaining confidence requires clear and credible government action, such as accelerating infrastructure spending and addressing governance issues. When that happens is anyone’s guess, but GCash’s management is betting that overall market conditions will have improved enough by the second half of next year to go ahead with its long-awaited IPO. 

    While some fintech startups face heavy pressure from venture capital investors impatient for an exit, GCash’s situation is different. Its key investors include the Philippine telecoms giant Globe (which owns 36% of Mynt, the fintech firm that operates GCash), Ant Group, and Japan’s UFJ Financial Group. These cash-rich corporates can afford to wait for better market conditions before cashing out.

    At the same time, GCash is in a strong financial position. During Business World’s One-on-One online interview series on September 29, Globe Telecom Inc. President Carl Raymond Cruz said that GCash does not need capital. It [GCash]generates its own capital so the need for an IPO technically, while it’s there, [is] not really high on the agenda right now,” he said. 

    Another factor contributing to GCash’s cautious IPO approach is the pressure on earnings caused by recent regulatory curbs on online gambling transactions. Such transactions previously helped the company rapidly grow its user base. Globe’s latest financial statements show that net contributions from affiliates, mainly Mynt, fell 24% sequentially in the third quarter to P1.6 billion from P2.1 billion in the June quarter. 

    During Globe’s third-quarter earnings call, chief financial officer Carlo Pruno said, “We do believe may see some pressure in the short term.” However, he added that Globe is confident in GCash’s medium and long-term growth given its strong fundamentals. 

    Meanwhile, GCash is continuing to prepare for its market debut. On Oct. 29, the Philippines’ BusinessWorld reported that Mynt had secured approval from the Securities and Exchange Commission (SEC) for its stock split, an importantstep toward its eventual IPO. The SEC’s approval allows Mynt to increase its common shares to P71.66 billion, at three centavos each, while keeping its authorized capital stock at P2.15 billion. A stock split boosts the number of shares without altering the company’s overall capitalization, effectively making each share more affordable and improving liquidity.

    Investor anticipation about the GCash IPO remains high, despite the delay. Analysts say the deal could raise $1.5 billion and be the Philippines’ biggest of all time, surpassing the $1 billion IPO of Philippine food company Monde Nissin in 2021.

    In this case, good things may indeed come to those who wait.

  • Revolut’s Nordic expansion is about more than challenging Klarna

    Revolut’s Nordic expansion is about more than challenging Klarna

    UK fintech giant Revolut, riding high on a new and improved valuation of US$75 billion, is set to challenge buy now, pay later (BNPL) juggernaut Klarna on the Swedish company’s home turf—and immediate environs. Revolut announced on November 6 that it would open a branch in Stockholm in 2026. The Swedish capital is home to the headquarters of Klarna.

    While Klarna’s largest market by revenue is the United States, its footprint runs deep and wide in the Nordics. About 82% of Swedes use Klarna. On the merchant side, a Dec. 2024 study by e-commerce market intelligence firm ECDB found that about half (47.2%) of Swedish online stores offer Klarna Invoice, while about 39.2% do so in Norway. These are the highest merchant adoption rates among e-commerce merchants in any market where Klarna operates.

    Yet Revolut’s interest in Sweden and the Nordic countries is not just about throwing down the gauntlet to Klarna. The UK fintech has long had a presence in the Nordics, where it already has 2 million customers, half of whom are in Sweden, and intends to increase that number to 3 million by the end of 2026. Chief Growth Officer Antoine Le Nel has emphasized that Revolut is, as usual, thinking very big: It wants to take on incumbent Nordic banks that control most consumer deposits, not just Klarna.

    Revolut’s new Stockholm branch will operate under the UK firm’s European banking license from Lithuania, allowing it to function as a local bank. That means Swedish customers could soon receive salary payments and local transfers entirely through Revolut. The company is also preparing a local product push consisting of daily-interest savings accounts in Nordic currencies, commission-free ETF investing and Apple’s tap-to-pay feature for small businesses.

    It all sounds promising—except that UK regulators have some concerns that Revolut may be biting off more than it can chew—though they issued the company a provisional banking license in 2024. In mid-October, The Financial Times reported that regulators are unsure that Revolut can implement risk controls able to keep pace with its relentless international expansion.

    Nik Storonsky, Revolut’s CEO and co-founder, said in September that his top priority was to get a UK banking license, to transfer customers into the new bank, and to offer them credit products. He and other Revolut executives hope to obtain the final license this year, but that seems unlikely with less than two months to go in 2025.

    Having managed to grow its valuation from US$45 billion in August 2024 to an eye-popping US$75 billion in just over a year, Revolut is betting that it can have its cake and eat it too: continue its brisk international expansion – it also set up shop in Colombia in October – and before long, receive a full banking license in the UK that will allow it to go head-to-head with large incumbent lenders. Driving Revolut’s confidence are growth across its business lines and in profitability. In 2024, Revolut’s profits jumped 150% to US$1.4 billion, while revenue rose 75% annually to $4 billion. Cryptocurrency, wealth management and subscriptions are now all key growth engines for Revolut.

    In 2026, Revolut will look to follow in Klarna’s footsteps and carry out a successful IPO. The Swedish firm listed on the New York Stock Exchange (NYSE) in September, raising US$1.37 billion at a valuation of $15.1 billion.

    Ironically, following the successful IPO, Klarna chairman Michael Moritz reportedly told employees: “We are 10 years behind Revolut.” While Moritz did not elaborate, we can make an educated guess that he was referring to Revolut’s successful diversification from payments into full-service banking, insurance, investing, and digital assets. In contrast, Klarna remains heavily dependent on payments and especially BNPL. It is that strong, diversified product portfolio and Revolut’s indefatigable persistence that could eventually pose a significant challenge to Klarna in its home market of Sweden and the broader Nordic region.