It’s 9am on a Monday morning and Nikolay Storonsky, the chief executive of digital bank Revolut, is sipping a takeaway coffee inside his start-up’s Canary Wharf headquarters.
Most of his employees have been working from home during the pandemic but Storonsky, who is today dressed in a purple plaid shirt, has continued to come into the office.
“For me personally, I prefer working in the office,” he says. “I just have my certain rhythm.”
Storonsky, 36, is sitting in a small conference known at Revolut as “The Quiet Room”. Perhaps it should be renamed. The webcam he’s using is so high on the wall that it makes the video feed resemble CCTV footage from a police interview room.
No need for a grilling. Since its incorporation in 2013, Revolut has expanded aggressively around the world, acquiring 10 million customers while rivals like Monzo have only taken baby steps towards becoming international banks.
Storonsky, a former Lehman Brothers and Credit Suisse trader, has led that expansion with co-founder Vladyslav Yatsenko, creating a global footprint for their company which now sees it valued at $5.5bn (£4.2bn).
Both men are on our Tech Hot 100 list of the UK’s richest tech start-up founders. But Storonsky’s larger stake in Revolut means he is now worth just over £1bn — the only boss of a British tech start-up to have amassed a ten-figure paper fortune — and has hit Number 1.
Telegraph Tech 100 2020: see the full list
It has not always been a smooth ascent. Lockdown threatened Revolut’s wild ride of expansion when the coronavirus pandemic struck.
“As Covid hit, all the transactions outside of Europe, they just disappeared,” Storonsky says. Banking start-ups such as Revolut make far more money from overseas transfers than domestic ones, and Revolut saw a 60pc drop in potential profits from interchange fees.
“[But] Overall,” he adds, “if I look at the company, it was very positive. Because we’re so diversified, we didn’t really feel it.”
Revolut has been able to maintain its financial health due to the bewildering range of services it offers. The company began life just like any other financial technology start-up, building an improved bank account with a slick app that puts centuries-old institutions to shame.
In the past few years, however, Revolut’s empire has expanded far beyond these relatively narrow horizons. Among other features it launched cryptocurrency trading, Revolut Junior for children, a premium metal card, commodities investing, stock trading and international money transfers.
That expansion has come amid allegations of a punishing work environment inside Revolut, including reports of staff working long hours and weekends — an attitude exemplified by the firm’s former unofficial motto "get s*** done." A neon sign at the company’s headquarters displaying that message was changed to "get it done" after eyebrows were raised in a City trying to leave risky behaviour behind in favour of a more cautious approach.
Storonsky previously pledged to ease the burden on employees while also defending their long hours.
The London fintech scene
Even if Revolut has diversified and no longer makes its margins purely from customers’ card transactions, however, the company is still making changes as a result of the pandemic.
“We became much more precise in our plans,” Storonsky says. “Before, when we were planning things, we were not that precise in terms of the amount of money we needed to make it happen.”
“For example, if we decided to launch in Japan, we never went through a precise business plan in terms of exact costings. We just decided we’ll go to Japan, the market is attractive. Let’s get it done.”
Storonsky, a kite surfing enthusiast with an athletic build, is adamant that Revolut’s international expansion will continue. It’s just this time the start-up is going to plan it all out first.
Growing to 36 countries has allowed the business to hoover up so-called “early adopters” in each region who are keen to jump on board and send their monthly wages into a digital bank account.
Revolut's chief executive is pleased that the pandemic hasn't derailed the company's plans
Credit: Geoff Pugh
This expansion has also exposed the company to regulatory scrutiny on a global scale. After Revolut was handed a European banking licence by the Bank of Lithuania, some politicians in the country called for an investigation into whether the business had Kremlin links in part due to Storonsky’s father’s job at Gazprom. Revolut denied any such ties and the investigation turned up nothing suspicious.
The biggest challenge now is reaching break-even — and eventually profitability. The company’s accounts for 2019 show that losses tripled to £106m as revenues rose to £163m.
This quest for profitability is a problem faced by all digital banks. Anne Boden, the chief executive of rival start-up Starling Bank, wrote earlier this year that the pandemic had “exposed those without a clear path to profitability.”
Storonsky seems relaxed and says Revolut could break even by the end of the year.
The question then is, how much profit could it make? Storonsky throws out a series of increasingly large numbers.
“To be honest with you, it doesn’t really matter,” he says nonchalantly, adding that he prefers to look at the company’s margins rather than millions or billions of pounds.
He’s similarly relaxed about the competition from rival London banking start-up Monzo, which earlier this month released its own metal card subscription.
“I think Monzo gave up in terms of their business,” he says. “If you look at their valuation, they dropped.”
Storonsky believes Monzo, the rival banking start-up co-founded by Tom Blomfield (pictured) has lost momentum in the past year
Credit: Geoff Pugh
Indeed, Monzo’s valuation collapsed from £2bn to £1.25bn when the business raised £60m in funding earlier this year.
“My feeling is something went wrong there and they’ve lost steam in terms of innovation.” Storonsky says of the business often considered to be Revolut’s arch rival. “I’m not really worried about what Monzo is doing.”
Storonsky’s gaze is further afield. “I’m looking at the US,” he says, “what Cash App is doing, what Chime is doing, what Robinhood is doing. I think at this particular moment, they’re probably stronger competitors than Monzo.”
Fintech | The technology transforming finance
Revolut is weeks away from applying for a US banking licence, a crucial step that could see it jump into the major league of financial technology. However, the US banking system is more difficult to navigate for start-ups and it’s likely to take years for a licence to be approved.
The natural next step is going public. Revolut certainly seems to have exhausted venture capital funding after raising more than $917m from investors.
“If we are lucky, we will not require additional funding any time soon,” Storonsky says.
But if and when it comes, he doesn’t see a stock market listing as a final outcome for the company. Instead, he describes it as a stepping stone on its journey.
“Floating is never a final destination,” he says. “It’s more like a means to achieving the goal. But not the goal.”
When Revolut does go public, will that be in London or New York? Staying to float in the UK might limit the amount of money available but it would send a political message that technology businesses can continue to flourish in the UK after Brexit.
“We haven’t even considered it yet,” Storonsky says.
What has been planned, however, is Revolut’s next destination. Latin America is certain and Storonsky even sees China as a potential new market.
But first, Britain’s first tech start-up billionaire has to reach break-even and lead Revolut out of the pandemic. If he can pull that off, the lender may be this country’s best shot at remaking the world of banking and becoming a global tech titan.
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