Revolut aims to take on Indian banks and their ‘criminal’ forex fees

Revolut is set to challenge Indian banks with its new offerings, targeting the $30 billion spent overseas by Indians.

**Revolut is officially launching in India, aiming to disrupt the country’s foreign exchange market.** The British fintech claims that Indians lose around $600 million annually in bank fees for cross-border payments, which it describes as 'criminal.' This highlights a significant issue in the financial services sector, where traditional banks have long dominated the foreign exchange landscape, often imposing high fees on customers. With regulatory approvals in hand, Revolut plans to offer a suite of financial services tailored to digitally savvy Indians aged 25 to 45, targeting 20 million users by 2030. The company aims to fill the gaps in the market by providing more affordable and efficient solutions for cross-border transactions, which are currently underserved in India. By leveraging technology and innovative financial products, Revolut hopes to change how Indians manage their money internationally and reduce the costs associated with foreign exchange transactions.

Revolut's Strategy in India

Revolut has been eyeing the Indian market since 2021, acquiring Arvog Forex in 2022 to secure a license for remittance and multi-currency services. This acquisition was a strategic move to establish a foothold in a market that is ripe for disruption. With a prepaid payment instrument (PPI) license from the Reserve Bank of India, it can issue prepaid cards and integrate with the Unified Payments Interface (UPI). This positions Revolut to offer a differentiated experience compared to traditional banks and existing fintech players. By utilizing the UPI, which is widely used in India for digital payments, Revolut can provide seamless transactions for its users. The company aims to leverage its technology to enhance customer experience and streamline the process of managing foreign currency transactions.

Targeting the Digitally Native

The fintech is focusing on over 150 million 'globally aspiring, digitally native' Indians. This demographic is characterized by their comfort with technology and desire for modern financial solutions. Revolut plans to onboard 20 million users by 2030 and process at least $7 billion in transactions. Its offerings will include a prepaid wallet with UPI support, a domestic Visa card, and international multi-currency options, along with budgeting tools and dedicated accounts for kids and teens. By catering to the needs of younger, tech-savvy consumers, Revolut aims to create a loyal customer base that values convenience and innovation in financial services. The introduction of features like budgeting tools and accounts for children reflects a commitment to financial literacy and responsible money management.

Regulatory Compliance and User Engagement

Unlike many competitors, Revolut will implement full KYC checks, verifying users against global sanctions lists. This strategy aims to attract 'high-intent customers' willing to undergo a detailed onboarding process. By ensuring compliance with regulatory standards, Revolut not only builds trust with its users but also positions itself as a responsible player in the financial ecosystem. Chatterjee emphasizes that success will be measured by user engagement and profitability, not just user numbers. This focus on quality over quantity reflects a strategic approach to building a sustainable business model in a competitive market. By prioritizing engaged users, Revolut aims to foster a community of customers who actively utilize its services.

Investment and Workforce in India

Revolut has invested $45 million to establish its operations in India, localizing its tech stack to comply with data sovereignty regulations. This investment is crucial for adapting to the local market and ensuring that customer data is handled in accordance with Indian laws. With 3,500 employees in India, it boasts the largest workforce outside the U.K. This significant presence underscores its commitment to the Indian market, as it prepares to compete with established players. The local workforce will play a vital role in tailoring products and services to meet the specific needs of Indian consumers, enhancing the overall customer experience. Revolut's investment strategy reflects a long-term vision for growth and innovation in the region.

Facing Competition

Despite its ambitious plans, Revolut will encounter stiff competition from both banks and fintechs like Niyo and BookMyForex, which are already entrenched in the cross-border payments space. The challenge will be to differentiate itself and capture market share in a landscape dominated by traditional banking practices. To succeed, Revolut must effectively communicate its unique value proposition and demonstrate how its services can provide better alternatives to existing options. By focusing on user experience, cost-effectiveness, and innovative features, Revolut aims to carve out a niche in the competitive Indian financial market. The ability to adapt and respond to customer needs will be critical in overcoming the challenges posed by established competitors.

Why it matters

Revolut's entry could significantly lower forex fees for Indian consumers.
It aims to modernize the cross-border payment landscape in India.
The fintech's focus on compliance may set new standards in the industry.
Revolut's success could inspire more foreign fintechs to enter the Indian market.

Key numbers

$30 billion: Estimated annual spending by Indians overseas.
$600 million: Estimated annual losses due to bank forex fees.
20 million: Target user base by 2030.
$7 billion: Projected transaction volume by 2030.

Context

Revolut's launch comes at a time when the Indian fintech landscape is rapidly evolving, with increasing demand for innovative financial solutions.

Revolut aims to take on Indian banks and their ‘criminal’ forex fees