Wise: Revolut FX Margins & Cross-Subsidies

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If you can define retail, that would be fantastic. We are more interested in the SME side, but retail as well, so defining retail would be great.

In terms of percentages, this is much lower than Revolut would like. It's certainly in the single digits. It depends. Again, if you analyze the retail customer base in certain ways, it can get into much larger proportions. But if you're taking a general view of the 50 million or so retail customers, you're talking single digits for primary accounts because you're getting your salary paid in there. There are a few other markers that have to be true for you to believe this is the case. They have not cracked this problem, at least as of a year ago. You would have seen from public sources that they have various ways of addressing it because it's a concern and an interest of theirs. They are arguably more successful on the SME side than on the retail side, simply by virtue of proportions of action.

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How human is the onboarding process for older banks like NatWest compared to Revolut? I'm trying to quantify the cost savings and the potential for mistakes in onboarding, particularly in terms of know your customer processes, comparing Revolut to traditional banks.

The difference is significant. At Revolut, you have KYB agents, which are necessary everywhere. It's not all done by AI; sometimes sales agents are involved, which adds to the human cost. The only human costs are for large clients requiring risk professionals. Revolut uses a JIRA ticketing system, which is public information. The onboarding cost for SMEs can be as low as one to two pounds, but for high-end cases, it can reach up to 200 pounds or higher. If it's an outbound sales case, it can be as high as a thousand pounds. These costs scale with the size of the business. The system prevents sales agents from spending excessive time on customers that won't be profitable. This transparency and cost efficiency are not present in major banks. At large banks, the cost is at least 10 times higher on average.

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Okay. In the annual report, they mention it's changed by now.

On Wise's website, they describe Revolut's FX rates too favorably. Even though they're competitors, I think they're giving credit where it's not due. Revolut does not consider FX as subsidizing anything. It does have subscriptions where it earns money, receiving subscription revenue instead of FX revenue on an ongoing basis. However, it still views this commercially.

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