Revolut, a financial technology firm based in London, broke even in December for the first time after it launched a service for converting and holding cryptocurrencies. The company says it added 500,000 customers in the past two months, bringing the total to 1.5 million.
The nearly three-year-old firm began offering bitcoin, ethereum, and litecoin in early December, partnering with crypto exchange Bitstamp for the service. Revolut said it’s also growing because of new products like geolocation travel insurance and because it now has teams on the ground in France, Germany, Spain, and Scandinavia. It has 350,000 daily active users and more than 800,000 monthly active users. (Six months ago, those figures were 100,000 and 600,000, respectively.)
Revolut CEO Nikolay Storonsky said in a statement that expansion, rather than profitability, is the goal right now. And while the company says the uptick in business wasn’t solely related to its new crypto offering, recent trends suggest that adding bitcoin to the mix can win over a bunch of new customers. Robinhood’s user base jumped to 4 million this month, up 1 million since November, after the brokerage app rolled out trading for digital assets.
There are risks. As Revolut’s disclosures point out, crypto is prone to wild price swings, and “exchanges are probably susceptible to irrational (or rational) bubbles.” Merrill Lynch barred its customers, and the financial advisers who make transactions for them, from buying bitcoin.
Keeping digital assets like bitcoin safe from hackers has also proven a challenge. Bitstamp, which has offices in London, Luxembourg, and New York, is one of the largest exchanges for digital assets, and its pricing data is used in the bitcoin index run by CME Group, a global derivatives exchange. Even so, Bitstamp was hacked in 2015 and $5 million worth of bitcoins were stolen.
Revolut says its customers’ cryptocurrency is held offline, known as cold storage, to keep hackers from breaking in. The company declined to disclose more information about its storage system, citing security reasons.
Europe has a number of upstarts that offer digital-only financial services. Others include Starling and Monzo, both of which have headquarters in London, and Berlin-based N26. As of January, Monzo said 500,000 people are using its app-only service, and 400,000 are now using its checking account.
It’s still early days for these fast-growing firms. For context, Royal Bank of Scotland has more than 18 million customers around the world. For its part, Revolut says it’s signing up as many as 8,000 new customers each day and is preparing to expand in the US, Australia, and Singapore, with talks underway from India to South Africa. The coming months will offer clues to whether these challengers with whizzy apps, bargains on foreign-exchange, and crypto trading services can become serious competitors for the big, established players.