Revolut, the British headquartered fintech that launched in New Zealand last year, is now seeking banking registration from the Reserve Bank.
Revolut says it has submitted an application to become a registered bank in New Zealand. Achieving banking registration would pave the way for the launch of new products and features, such as interest-bearing savings products, and a wider range of credit/debt options, the firm says.
Since its NZ launch in July 2023, Revolut says it has processed transactions valued at about NZ$350 million, and launched 18 products.
Revolut is currently listed on the Ministry of Business, Innovation & Employment's Financial Service Providers' Register, where all NZ financial service providers need to be registered, to provide services; changing foreign currency, issuing or managing means of payment, operating a money or value transfer service, and trading financial products or foreign exchange on behalf of other people. It's supervised for compliance with the Anti-Money Laundering and Countering the Financing of Terrorism Act by the Department of Internal Affairs.
"Underserved for decades, Kiwis have had to put up with a lack of innovation, core functionality and high fees. Revolut is here to change that. We don’t limit our thinking to traditional banking products and are committed to enhancing the hauora (well-being) of Kiwis and providing them with innovative solutions to manage their money. Receiving a banking license will allow Revolut to become the first global digital bank in New Zealand and will drive much needed competition across the industry. We look forward to working with the Reserve Bank of New Zealand on our application," Revolut's NZ Head Georgia Grange says.
Among the services Revolut offers is cryptocurrency trading, something no existing NZ bank does.
At least two local fintechs are also seeking banking registration from the Reserve Bank, Dosh and Debut. The growing interest from fintechs in obtaining banking registration comes on the heels of the Commerce Commission's market study into banking competition and an ongoing parliamentary inquiry into banking competition.
Finance Minister Nicola Willis has said the Government will implement all 14 of the Commission's recommendations. And the Reserve Bank is proposing to reduce the minimum capital requirement for entities taking deposits from the public from $30 million to between $5 million and $10 million, and broaden the criteria for use of the word "bank."
Additionally a depositor compensation scheme is expected to be introduced in NZ from mid-2025. It would compensate up to $100,000 for each depositor per licensed deposit taker in the event of a deposit taker failing.
Becoming a bank in NZ has typically been a slow process. For example, building society Heartland NZ, formed through the merger of Marac Finance, CBS Canterbury and the Southern Cross Building Society in January 2011, subsequently obtained banking registration in December 2012.
Founded by its Chief Executive Nikolay Storonsky - a former Lehman Brothers trader - and Vlad Yatsenko in 2015, Revolut says it now has more than 50 million customers making more than half a billion transactions monthly. It launched in Australia in 2020.
In July Revolut announced it had received a British banking licence after a three-year wait. Restrictions in place mean it must meet requirements to exit a so-called mobilisation stage and operate as a bank.
Revolut is facing a British lawsuit that could see it pay a Serbian energy company €700,000 as part of a fraud claim, Bloomberg reports. Revolut denies all elements of the claim.
Bloomberg says the case is one of thousands of complaints against Revolut over authorised push payments scams, where criminals trick people into sending money online to an account outside their control. The fintech firm tops British rivals in terms of the number of fraud complaints, according to data from Britain’s Financial Ombudsman Service, says Bloomberg.
Last month the Financial Times reported some early Revolut investors had sold between US$300 million and US$500 million worth of shares, with about US$100 million sold to Goldman Sachs clients, in a deal valuing the fintech at US$45 billion. This comes with Storonsky talking about a share market listing.
Revolut obtained a European Union banking licence in Lithuania in 2018. There, according to The Guardian, it has faced two parliamentary investigations over Russian links and been penalised for failing to file its financial accounts on time. The Russian-born Storonsky has renounced Russian citizenship.
Auditor BDO raised concerns about Revolut's delayed 2021 accounts in Britain, which the fintech told Reuters were remedied in 2021.
Meanwhile, Revolut recently held a free customer gig in London featuring pop star Charli xcx.
6 Comments
I'm glad the article mentions how Revolut's lax security and poor customer service make it a breeding ground for scams and frauds including the infamous push payments scam.
I'm not saying our banks are any better in returning your money when you've fallen for a scam, but good luck trying to react quickly, discover what went on and recover your money when the only way to contact 'the bank' is via an app.
See BBC article for what we can expect from them:
I stopped reading at this point "He lost £39,000 in May when scammers tricked him into transferring money into his Revolut account and giving them access to it."
Local banks are doing as much as possible to avoid being contacted by phone but I seldom need to make contact and the only time is when I can't locate what I want on line or I've made an online mistake.
Kiwis have had to put up with a lack of innovation, core functionality and high fees.
We certainly have, and the recent paywave/credit card fees being charged by retailers.
In the US, any retailer charging card fees would be dobbed in and be investigated.
It is time we pushed back on card fees, driving us back to cash. IS that what we want?
Underserved for decades
Yet the services offered by these new FinTechs used to be core services of our banks. How'd we let that happen? Whom is really serving whom?
Do we really need new entrants in this sector or simply an overhaul of the existing?
It's a nice spiel by these FinTechs, no scepticism that there's a former Lehmans Bro trader behind it all, or their principles.
How about a little experiment to push back - can enough of us attempt to withdraw our cash?
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