Revolut Bank wants to become a branch in Portugal (it is in the process of being licensed by the Bank of Portugal).
Revolut Bank will become a branch in Portugal in the coming months, a change in banking license that the company considers necessary to give more confidence to customers, aspiring to become the third largest financial entity in the number of users.
“We now have a European Iban, based in Lithuania, with the same guarantees as any other bank, and we have ‘passported’ that license to Portugal. The next step to convert Revolut into a product that everyone uses on a daily basis in the customer’s main account is to offer a local Iban [Portuguese bank identification number], we think we will have that license in the coming months,” said the head of Revolut in Portugal and Spain, Ignacio Zunzunegui, in an interview with Lusa.
In late 2021, the financial services technology (‘fintech’) company Revolut launched its bank in Portugal, Revolut Bank, a credit institution headquartered and authorised in Lithuania and operating in Portugal under the free provision of services regime (by which any bank authorised in a European Union country can operate in any other member state).
This year, Revolut Bank wants to become a branch in Portugal (it is in the process of being licensed by the Bank of Portugal), a change it considers fundamental so that its clients do not see it as complementary in the management of their finances, but as their main banking tool, through which they receive salaries, pay bills, put money aside for savings, among other financial operations. It will also make the minimum banking services account available.
“We want the Portuguese to get out of their bank’s ‘app’ [application] and use Revolut,” Zunzunegui said.
As a branch, Revolu Bank customers’ deposits will continue to be guaranteed by the Lithuanian Deposit Guarantee Fund.
All European Union countries guarantee deposits up to €100,000. However, customers perceive the risk differently when the deposit guarantee fund is that of their country or another.
As for supervision, as a branch, prudential supervision (assessing the financial stability of banks, notably solvency and liquidity) will remain with the authorities of the home country (in this case, Lithuania). Behavioural supervision (relating to the marketing of retail banking products and services) will belong to the Bank of Portugal when the Revolut Bank becomes a branch, the banking regulator and supervisor told Lusa.
The Bank of Portugal will carry out behavioural supervision, receive any complaints from banking customers and carry out analysis and possible sanctions. At the moment, and while the Revolut Bank is still operating in Portugal in the free provision of services, customer complaints are forwarded to the Lithuanian authorities.
According to Ignacio Zunzunegui, Revolut “wants to become a key banking operator in Portugal” and be the third largest financial entity in Portugal by the number of users.
Revolut reached one million users in Portugal in 2022, when it was the most downloaded financial ‘app’ in the country, according to the company.
Also in 2022, in Portugal, transactions increased 75% to over 32 million. It also states that 90% of transactions were carried out in Portugal and not when customers were travelling (these being 10% of transactions).
The UK-based company does not disclose, however, revenues and net results of the operation in Portugal.
Another of Revolut’s goals in the Portuguese operation is to “integrate” with Multibanco services, as these services are perceived as very important by customers in Portugal.
Ignacio Zunzunegui said that three and a half years after the beginning of talks with SIBS (Multibanco network manager), “progress is starting to be made” to reach an understanding to have products in the ‘app’ such as payments to the state, payment at small business terminals or MB Way.
Revolut also wants to provide personal loans (it already exists in Spain, and the credit ranges from €1,000 to €30,000) but has no date yet for this to happen in Portugal.
For Ignacio Zunzunegui, an important step in Portugal will be the launch this year of Revolut in Brazil, given the many Brazilians living in Portugal.
“It will allow Brazilians living in Portugal to send money to Revolut accounts in Brazil for free, instantly,” he said.
Moreover, said Ignacio Zunzunegui, Revolut wants to be an MBWay for the world: “We want to turn Revolut into a Global MB Way, where everyone can send money to anywhere in the world instantly, our vision is that money has no geographical limits”, he said.
Ignacio Zunzunegui said that its commissions were “below traditional banks”, justifying that this is possible due to the smaller structure.
Revolut has around 6,000 workers worldwide. By comparison, Caixa Geral de Depósitos has the same number of employees only in Portugal.
Traditional banks have been critical of the lower requirements for fintechs, considering that the differences are a competitive disadvantage and cause them to lose business to less regulated activities. Branches also have lower charges than banks that are headquartered in Portugal.
In 2019 there have been several interventions by the president of BCP, Miguel Maya, arguing that the national Resolution Fund must be paid by all banks that make financial transactions with Portuguese customers. “Why shouldn’t a branch support it? BCP should change its headquarters to stop paying the Resolution Fund,” he questioned.
In Portugal, most of Revolut’s users are between 25 and 34 years old, and the company says it is noticing growth in the 18 to 24-year-old segment.
Revolut has 1,200 employees in Portugal, working in the technology centre in Matosinhos.