The company plans to meet the necessary requirements to start operations and thus begin with its star product, which are instant international transfers.
With more than 40 million customers worldwide, about 50 regulatory permits in different countries, and a banking license to operate in the European Economic Area, the British-origin unicorn Revolut has received approval from the National Banking and Securities Commission (CNBV) to establish itself as a bank in Mexico.
Now, the new bank in the country, led by Juan Miguel Guerra Dávila, will have to meet the required standards to be able to start operations, and thus, the British startup’s subsidiary will join the offer of digital neobanks in Mexico with its star product: international transfers.
In an interview with El Economista—weeks before the CNBV’s governing board gave the green light for the bank’s establishment—Guerra Dávila detailed that although Revolut is present in about 40 countries with various licenses and financial services, obtaining a banking license in Mexico puts the country in the select group of jurisdictions where the startup, officially valued at $33 billion, operates as a bank, only alongside the European Union.
“There are about 50 banks in Mexico, and four banks control 64% of the assets; half of the adult population is unbanked, which represents an opportunity and a unique moment, as we have the privilege of being able to arrive well, even if we are not the first,” Guerra Dávila explained.
Since 2022, the person in charge of landing Revolut’s strategy in Mexico started working to allow the global startup to operate in the national territory. First, operating as an Electronic Payment Funds Institution was evaluated but then decided against, and later, it obtained approval as a money transmitter—a figure it did not use. However, the goal always pointed to the banking license.
This is because the banking license allows Revolut to have a comprehensive service, which is basic for deploying the offer intended, first with the international transfer service and later, with different products.
“The objective of Revolut is to put all the financial services that people in Mexico need in a single app; today, one has to carry the traditional bank on their cell phone plus one or another fintech to move money between them, it’s quite complex, why bother, what better than having everything under one roof, so that is an important part of the value proposition,” the executive detailed.
Regarding international transfers, Guerra Dávila explained that the firm’s global model differentiates it from other market participants by being the “only digital bank in the world that allows instant and free shipments between its users.”
“Remittances from the United States to Mexico are about $60 billion a year, and the average cost according to official figures is 5% (per event), but one must consider hidden costs such as transfer, time, etc.; if only Revolut is used, we would be saving our countrymen at least $3 billion a year, which could change entire communities,” Guerra Dávila detailed.
Guerra Dávila expressed confidence in Revolut’s model having significant growth in Mexico, especially for two reasons: most of its global revenues come from fees, not from interest charges, and because its operation in the country will be based on its global platform.
“Broadly speaking, we have the same platform for the whole world, that is, the same structure of fixed costs, which has already been paid for by the 40 million customers we have worldwide, so when it is launched in Mexico, the incremental fixed cost is just the payroll, but if a digital bank were to be launched from scratch, one would have to pay engineers, all the customer infrastructure, etcetera,” the executive stated.
“Thus, we can charge less to customers in Mexico because the costs are lower, even within the current digital offer, in addition to having more sources of income, we have an even leaner structure.”
In this context, unlike other players focused only on consumer credit, Revolut’s plan in Mexico is not to bet on a single product, but to have diversification, which has been a characteristic of the firm globally to grow in revenue and profits.
“As a business, you have a much more robust margin and we can also afford to be much more generous in your prices or in your rewards to users, so a virtuous circle is created and for me, that is what it means to arrive well, that is, not to arrive first, but to arrive better,” he added.
In 2022, the firm founded by Nikolay Storonsky and Vlad Yatsenko, registered revenues of $1.1 billion, an annual growth of 45%, as well as an EBITDA of $28 million, with a net profit of $7 million.