3 Reasons Why Revolut is Offering Even More Crypto Products
Sarah Kocianski
Head of Competitor Strategy
Offering customers access to cryptocurrencies is fast becoming a must-have feature for fintechs in the banking and investment segments. Startups are racing each other to launch the broadest range of services possible in this space.
Revolut has today taken another step forward in this arena by adding XRP and Bitcoin cash to the range of cryptocurrencies customers can buy, hold, and sell within its app.
Revolut charges a 1.5% markup on the average exchange price for buying cryptocurrencies. The new cryptocurrencies will be offered alongside Bitcoin, Litecoin, and Ethereum. Access to which Revolut has offered since December 2017.
The announcement follows hot on the heels of the launch of another cryptocurrency product. Vaults was unveiled by Revolut last week. It allows customers to round up their card payments to the nearest whole number and save their spare change in cryptocurrencies. So why the race to offer these services to customers?
There are two main reasons fintechs, and some large banks and investment firms, want to offer customers access to cryptocurrencies. Customer demand and the potential for significant revenue generation.
Cryptocurrencies have hit the mainstream. They’re being advertised on public transport and covered by large news outlets, so consumer awareness is high. They are also extremely volatile, offering investors potentially significant gains (and losses). Add to that the fact they are global and it requires very little capital to make an initial investment and you have an asset which proves highly appealing to novice investors.
Fintechs can leverage customer demand for access to cryptocurrencies to boost customer numbers more broadly. Customers may sign up in order to be able to easily invest in cryptocurrencies. But once onboarded, they may well choose to sign up to other services offered by the fintech. The more services a customer uses from a provider, the more loyal they are likely to be, making them overall a more valuable customer.
The volatility of cryptocurrencies, combined with the high customer demand for them, means that people are willing to pay much higher fees to trade them than they would be to trade more conventional assets such as stocks and shares.
The nature of cryptocurrencies makes them a risky investment. Ethical questions remain as to whether fintechs such as Revolut, which markets itself as a bank alternative, should make investing volatile assets so easy. Customers are used to banks keeping their money safe. Revolut does offer a certain amount of customer education on its site, whether that’s enough is still far from certain. For now, it seems clear that fintechs will continue to race to offer as wide a variety of cryptocurrency services as possible. However, it’s quite possible that in the future their ability to do so, and to generate revenue in this way, may be hampered by regulators and national watchdogs looking to implement more stringent customer protection rules.
On the other hand, customer interest in cryptocurrencies could be a boon for those looking to encourage more people to think beyond just putting any spare cash in a savings account. Interest rates on such accounts remain low in Western Europe and the US. So, many younger people are missing out on making the most of their money. If the likes of Revolut offering customers access to cryptocurrencies results in broader interest in investing, then it could be seen as part of a wider customer education piece that encourages new demographics to dabble in the industry. Get involved in the discussion at Fintech Insider News. Sarah is a Principal Analyst at 11:FS and regularly hosts Fintech Insider and Insurtech Insider. You can follow her on Twitter @SarahKocianski or email her at sarah.kocianski@11fs.com
1) Customer Demand
Cryptocurrencies have hit the mainstream. They’re being advertised on public transport and covered by large news outlets, so consumer awareness is high. They are also extremely volatile, offering investors potentially significant gains (and losses). Add to that the fact they are global and it requires very little capital to make an initial investment and you have an asset which proves highly appealing to novice investors.
2) Customer Acquisition
Fintechs can leverage customer demand for access to cryptocurrencies to boost customer numbers more broadly. Customers may sign up in order to be able to easily invest in cryptocurrencies. But once onboarded, they may well choose to sign up to other services offered by the fintech. The more services a customer uses from a provider, the more loyal they are likely to be, making them overall a more valuable customer.
3) Revenue Generating Potential
The volatility of cryptocurrencies, combined with the high customer demand for them, means that people are willing to pay much higher fees to trade them than they would be to trade more conventional assets such as stocks and shares.
Ethical Questions Remain for Revolut
The nature of cryptocurrencies makes them a risky investment. Ethical questions remain as to whether fintechs such as Revolut, which markets itself as a bank alternative, should make investing volatile assets so easy. Customers are used to banks keeping their money safe. Revolut does offer a certain amount of customer education on its site, whether that’s enough is still far from certain. For now, it seems clear that fintechs will continue to race to offer as wide a variety of cryptocurrency services as possible. However, it’s quite possible that in the future their ability to do so, and to generate revenue in this way, may be hampered by regulators and national watchdogs looking to implement more stringent customer protection rules.
But It’s a Way to Get Customers Investing
On the other hand, customer interest in cryptocurrencies could be a boon for those looking to encourage more people to think beyond just putting any spare cash in a savings account. Interest rates on such accounts remain low in Western Europe and the US. So, many younger people are missing out on making the most of their money. If the likes of Revolut offering customers access to cryptocurrencies results in broader interest in investing, then it could be seen as part of a wider customer education piece that encourages new demographics to dabble in the industry. Get involved in the discussion at Fintech Insider News. Sarah is a Principal Analyst at 11:FS and regularly hosts Fintech Insider and Insurtech Insider. You can follow her on Twitter @SarahKocianski or email her at sarah.kocianski@11fs.com