Revolut’s Bold Move: Separating Investments from Its Super App Strategy
In a surprising move, Revolut, the Western wannabe financial Super-app known for its all-in-one approach, has launched a standalone retail wealth management app called Revolut Invest.
This move comes at a time when global benchmark leader (and competitor in Brazil and soon in the MENA region) Nubank is taking the opposite approach by consolidating its investment solutions within its main app.
Headlines:
2. Revolut launches standalone retail wealth management app Revolut Invest
What we know:
- Revolut is piloting its new investment app in three European countries: Greece, Denmark, and the Czech Republic.
- The Czech Republic has the highest number of Revolut users among these pilot countries.
- Revolut will charge a flat fee of either 25bps or €1 for equity and bond investments, with variable fees for CFD instruments.
- The investment app is operated by the legal entity Revolut Securities Europe UAB, a Lithuania-based entity regulated by the Bank of Lithuania and licensed as a broker. But CFD trading is handled by a 3rd party (most probably CMC Connect broker — LON: CMX)
- In Feb this year, Revolut launched IN its all-in-one app, its own Robo-Advisor service in the EEA with a minimum investment starting at EUR 100. The Revolut Robo-Advisor is offered at a 75bps annual mgt fee charged monthly. What I like about this offering is the convenience of setting up recurring transfers from EUR 10 and higher to your Robo-Advisor portfolio at predefined time intervals. Effective behavioral nudges via tech-enabled Dollar-cost averaging are great for investors.
Why The Standalone Move?
- Expanding User Base: None of the pilot countries are among Revolut’s top markets regarding annual users or even app downloads. This suggests that Revolut is using the standalone app to gain traction in markets with less penetration.
2. Feature-Rich Platform: A standalone app allows Revolut to load it with tons of features tailored for investing, offering a better experience than what’s possible within their all-in-one app. Revolut is also known for being the leader in terms of adding features/products at a pace that no other neobank globally can keep up with. I can safely say that for every 10 features that Nubank adds, Revolut has been adding 100 or more.
3. Competing with Specialized Platforms: By creating a dedicated investment app, Revolut is positioning itself to compete more directly with Fintechs like eToro. Headlines have even been saying that Revolut wants to compete with Robinhood (although Robinhood isn’t available in Europe).
4. Serving a different user base — CFD traders: The Revolut Robo-Advisor service in the EEA is not for the same users as the Standalone Revolut Invest app which offers CFDs (a European term for derivatives and leveraged betting) as a core product (the only product that will make money). Revolut in my opinion is going after traders with this offering rather than first-time investors.
Critical Thoughts
I am sure Revolut will carefully monitor the performance of this standalone app in the pilot countries before considering a broader rollout. While this move is interesting, it raises some questions:
1. Is there really a need for another mobile-only wealth app with CFDs as the core monetization product? And isn't the lack of desktop functionality a significant limitation for serious investors/traders that are served by Interactive Brokers and the likes?
2. The inclusion of CFDs, which are high-risk instruments, in an app aimed at retail investors could be concerning from a consumer protection standpoint. I can safely say that most CFD traders are at a loss. I have to ask myself at this stage, whether this is what Fintech was aiming for?
3. By separating the investment features from the main app, Revolut might be sacrificing some of the seamless user experience and cross-selling opportunities that made their all-in-one approach successful. I bet that Revolut will not introduce this standalone Investment app in the UK, Poland or Romania which are their big markets.
In conclusion, Revolut’s decision to launch a standalone investment app marks a significant shift in its SuperApp, All-in-one strategy. While it offers opportunities for growth and specialized features, it also presents challenges in terms of user experience and integration with their existing ecosystem. Only time will tell if this pays off in the competitive fintech landscape.
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