- Talks with Japanese investment giant Softbank now underway
- Target of USD$500m to fund Revolut’s daring expansion plans
- Fintech innovator also announces new machine learning card fraud detection tech
Cross-border payments innovator and fintech challenger bank Revolut is in talks with Japanese investment giant Softbank to raise a massive USD$500 million (£389 million) in a series D funding round.
The funds are destined to be ploughed into Revolut’s ambitious expansion plans. Talks with Softbank are said to be at a relatively early stage, according to the British Times newspaper, and will mark the investor’s first foray into the in the UK fintech sector via its $100 billion “Vision Fund”, the world’s biggest investor in tech firms. The deal is expected to close in early 2019
Revolut has built its reputation on delivering market-leading services for people wishing to transfer money overseas at low cost. Its overseas transfer rates are peerless, as it uses the interbank exchange rate - the FX exchange rates used by the banks in wholesale markets, allowing it to outperform many money exchange brokers as a result. A quick money transfer comparison will prove the point.
The talks with Softbank come a mere seven months since Revolut successfully sealed its last funding round in April this year, raising a princely USD$250 million - a deal that put its value at $1.7 billion, a massive five-fold increase in its valuation in under a year, and bestowed the startup with “unicorn” status.
More funds at this juncture may prove critical to the success of Revolut’s efforts to launch its banking app in the United States, one of the most difficult markets to crack for fintech startups. The US expansion isn’t the only one that’s underway; Revolut is also expanding into Australia and Japan. None of these are by any means easy feats. The startup’s US launch has already been pushed back a number of times due to the strict regulatory environment in the US.
The additional funds will also assist its application for a full banking licence, a development that would allow it to diversify its services beyond its current pre-paid card offerings.
At this point, it isn’t clear whether the challenger bank’s previous backers, which include Draper Esprit, DST Global and Index Ventures, will be participating in the new funding round.
Earlier this year, Softbank announced that it was planning to invest USD$200 million into fintech firms via its Vision Fund.
From its current customer pool of two million users, Revolut has set a target of servicing 100 million customers within the coming five years. Should that goal come to fruition as the company expects, Revolut will morph from fledgling challenger bank into one of the most-used financial businesses in the world.
The funding round news broke simultaneously with news of another Revolut innovation. It announced this week that by using algorithms, machine learning and cutting-edge computational techniques, it has seen a four-fold decrease in card fraud and money laundering in two months.
The technology crafts predictions about customer behaviour and then detects new fraudulent patterns without human intervention.
Commenting, Revolut founder and CEO Nik Storonsky said: “If you’re on a mission to reach tens of millions of customers and scale your business globally, then you cannot rely solely on manual human processes to effectively protect your customers against financial crime, especially as criminals are becoming more savvy in their tactics.”
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