Challenger Bank Revolut In Two-Stage Launch Process
The challenger banks have issued their challenge and are engaging in battle. The latest news on the leader of the challenger banks, Revolut, is reported by our friends at AltFi. In a post-Brexit world, the banking launch is a two-stage process. There’s much more news to come from this part of the financial-services world.
Revolut has officially launched as a bank in ten European countries, using its Lithuanian banking licence to do so.
As of today, Revolut now offers protected deposit accounts in Bulgaria, Croatia, Cyprus, Estonia, Greece, Latvia, Malta, Romania, Slovakia and Slovenia.
To utilise the protected accounts, Revolut’s eligible customers just need to upgrade to Revolut Bank to gain access to a wider range of services the fintech now offers.
Virgilijus Mirkės, Chief Executive Officer of Revolut Bank, said: “Launching the bank in ten new European markets will provide a greater level of security and confidence for our customers, and will enable us to launch a host of new products and services in the near future.”
To date, Revolut has amassed over 15m customers worldwide in nearly 40 different markets.
The digital banking service processes more than 100m transactions a month, with customers able to send money globally and hold and exchange 31 currencies in the Revolut app.
While the fintech is busy launching fully-fledged bank accounts in countries across Europe, Revolut is still yet to do so here in the UK.
Earlier this year, Revolut finally submitted its application for a UK banking licence after operating as an e-money institution for nearly six years.
If the fintech’s application is successful, Revolut’s customers will finally have access to the Financial Services Compensation Scheme (FSCS), which will protect deposits held in Revolut accounts up to £85,000 per person.
Revolut was first granted a European banking licence from the Bank of Lithuania back in 2018 and launched its first bank accounts in the country in May of last year.
Historical Performance And IFISA Process Guide
- Money&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee).
That figure is the result of over £20 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders’ capital is at risk. Read warnings on site before committing capital.
- Money&Co. has been lending for over 5 years and has only had two bad debts so far, representing a bad debt rate of 0.03 per cent per annum.
All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.
So here’s our guide to the process:
- Step 1: Register as a lender. Go to the login page, and go through the process that the law requires us to effect. This means we have to do basic checks on you to comply with money-laundering and other security requirements.
- Step 2: Put money into your account. This is best done by electronic transfer. We can also process paper cheques drawn in favour of Denmark Square Limited, the parent company of Money&Co.
- Step 3: Buy loans in the loan market. Once you’ve put cash in your account it will sit there – and it won’t earn interest until you’ve bought a piece of a loan. It’s this final step that requires lenders and IFISA investors to be pro-active. Just choose some loans – all loans on the Money&Co. site can be held in an IFISA – and your money will start earning tax-free interest.
The ISA allowance for 2020/21 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.
Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.
Risk: Security, Access, Yield
Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here’s one of several earlier articles on security, access and yield.