Case Studies, Payments Industry, Fintech

How Modulr’s infrastructure enabled Revolut to scale and take on established banks

Modulr By Modulr on 14 July 2020   •   5 mins read
<span id="hs_cos_wrapper_name" class="hs_cos_wrapper hs_cos_wrapper_meta_field hs_cos_wrapper_type_text" style="" data-hs-cos-general-type="meta_field" data-hs-cos-type="text" >How Modulr’s infrastructure enabled Revolut to scale and take on established banks</span>

In just five years, Revolut has transformed from its origins as a travel and foreign exchange app to a popular financial brand that’s set to challenge traditional banks with a full current account service.

Modulr’s flexible payments infrastructure sits at the core of this evolution, enabling Revolut to offer consumer and business banking services without the cost or impediment of traditional banking infrastructure.

The FX origins of Revolut

Revolut’s founders, Nik Storonsky and Vlad Yatsenko, set out in July 2015 with a vision to minimise the exorbitant fees typically charged when consumers and businesses buy and sell foreign currencies. Revolut soon added a payment card so that customers could pay in a foreign country at a rate mirroring spot exchange rates, saving on customary forex fees.

As word spread about the money-saving capabilities of Revolut, the company acquired new customers at a rapid pace. Soon, Revolut was being inundated with customer requests to expand its offering and deliver services more akin to an established bank.

However, setting up what most people would consider the essential banking service – fully functioning current accounts – was not an easy task.

Competing against established banks

Infrastructure is a major stumbling block for many fintech startups: it is difficult to replicate the back-end of established banks or directly link up with the banking system. Without infrastructure in place, challengers such as Revolut contend with slow processes that are frustrating for users and also face difficulties in scaling to service millions of customers.

Even when a company overcomes these difficulties it can struggle to match a classic banking product. For example, technical limitations can mean that a startup offers some of the features associated with a current account, but not all of the features offered by an established bank. Revolut faced these difficulties too.

Another challenge is provisioning banking services at scale – opening new accounts as fast as customers sign up and keeping pace with accelerating demand.

Nonetheless, Revolut has succeeded at offering a comprehensive current account service which is now used by millions of consumer and business customers. Given that traditional banking infrastructure is effectively beyond the reach of a startup, how did Revolut manage to deliver its current account service?

On the hunt for a robust, flexible and scalable payments technology partner

From the outset, as a mobile-first company, Revolut knew it had to deliver responsiveness – quick account creation and fast transaction processing. That required robust, flexible and scalable payments infrastructure. Revolut turned to Modulr’s API-driven payments solution to support their goals for rapid growth.

Modulr’s infrastructure enabled Revolut to rapidly process customer signups, activating new accounts in record time and at scale, with thousands of users signing up every day.

“With the payments capabilities provided by Modulr, Revolut has been able to give customers the best possible transaction experience. When our customers top up their accounts they can start spending straight away – instead of waiting hours or days for funds to become available,” says Nik Storonsky, CEO and founder at Revolut.

Great forex rates and responsiveness made Revolut popular with its customers, while the scalability achieved with Modulr meant that Revolut could cope with rapid customer acquisition. In turn, fast growth pushed Revolut to a new level of prominence in the minds of consumers and businesses.

“Modulr helps us to expand our offering and as a result we experienced a huge surge in customer demand. We soon realised that offering traditional banking services is not only attractive and necessary, but also very feasible,” says Nik Storonsky, CEO and founder at Revolut.

How the Modulr partnership means Revolut continues to delight customers

For most consumer and business banking customers, a comprehensive current account involves several components. It should go beyond the ability to make and receive payments or use debit cards. For example, customers may want to pay bills and subscriptions with direct debit or take advantage of the current account switching service (CASS).

Banks have access to these components by default, but a company operating outside the traditional banking environment can find itself blocked by infrastructure requirements. Together, Revolut and Modulr set out to overcome these obstacles.

Doing so involved deep teamwork – Revolut and Modulr worked closely together on a daily basis. Modulr’s extensive roadmap of features also came into play: with a view on the future, Modulr had already started to plan elements of the infrastructure required to enable current account services.

Step by step, Revolut added additional current account features, including the launch of direct debit capabilities in November 2019. The result – Revolut’s customers can use their Revolut account just like they use a legacy bank’s current account.

Customers can set up direct debit payments to pay for subscriptions like gym memberships. They can also effortlessly switch their banking service to Revolut thanks to the current account switching service. Businesses receive payments and pay suppliers across the European Economic Area (EEA) thanks to Revolut’s extensive scalability – while enjoying highly favourable foreign exchange rates.

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“Modulr's platform has helped us eliminate obstacles and inefficiencies and undertake an ambitious growth plan. We've been able to cut out the middlemen that traditionally obstruct the delivery of banking services. This has allowed us to offer the next generation of financial services and differentiate our business in a competitive market.”

Nik Storonsky, Revolut
Looking to deliver best-in-breed banking products? Book a free 30 minute  payment and processes audit today to learn how Modulr can help. Learn more →

The takeaway for fintech startups

Modulr’s payments platform allowed Revolut to build the critical mass it needed to deliver an experience to rival established banking service in a competitive market. Next, in close partnership with Revolut, Modulr built the components required to offer a comprehensive current service that challenges traditional banks.

“Modulr’s platform has helped us to eliminate obstacles and inefficiencies and undertake an ambitious growth plan. We’ve been able to cut out the middlemen that traditionally obstruct the delivery of banking services. This has allowed us to offer the next generation of financial services and differentiate our business in a competitive market,” says Nik Storonsky, CEO and founder at Revolut.

The lesson of Revolut’s transformation is that even if a startup does not have access to traditional banking infrastructure, partnering with Modulr can bridge the gap. Modulr provides the plumbing that allows fintech scaleups (and established FinTechs launching new payment features!) to build a payment service from the ground up.

This means that Modulr’s clients, no matter how big or small they are, can compete with established financial institutions. At Modulr, we’ve seen time and time again how infrastructure acts as the catalyst that drives competition in the financial services industry, and we’re proud to be a key part of this movement.

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