Last week, I commented on the launch of a new digital bank called Sesame Cash through bank partner Community Federal Savings Bank. This week, the European fintech Revolut has launched its digital banking product in the U.S. through Metropolitan Commercial Bank.
Revolut has had great success in Europe and is flush with cash from a recent round of funding to help its U.S. launch. Revolut’s initial product looks like all the other digital accounts, as TechCrunch noted:
Like competing challenger banks, such as Chime and N26, Revolut lets you open an account from your phone. After downloading the app, you enter personal details and send a few official documents to comply with know-your-customer regulation.
After that, you get U.S. account details and you can instantly top up your account with a bank transfer or a card transfer. A few days later, you also receive a physical debit card. You can also generate a virtual debit card from the app.
Revolut lets you control your debit card from the app directly. You can receive notifications every time you make a transaction. You can freeze and unfreeze your card, set some limits and restrict some feature, such as online payments or ATM withdrawals.
Where Revolut offers some differentiation is in its foreign currency capabilities:
One of Revolut’s key features is that you can convert from one currency to another at a low fee — sometimes without any markup for popular currencies and small transactions (more details on foreign exchange fees here). You can hold foreign currencies in your Revolut account or send money to another Revolut user or a bank account in another country. Revolut also gives you local banking details to receive EUR or GBP.
Two questions to keep in mind as this unfolds:
1) Will the foreign currency capabilities be enough to differentiate the Revolut solution from the crowded digital banking market?
2) Given the current coronavirus pandemic, will consumers be too preoccupied with their well-being to have an interest in banking, or are consumers so bored “sheltering in place” that opening up an account virtually is just the kind of distraction they need?
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group