The competition among digital banks in Brazil is about to get more fierce. Revolut, the second most valuable neobank in the world, has announced its local leadership and is planning to launch its financial super app in the country in the second half of 2022.
As the largest Latin American market, Brazil is a “strategic priority,” said Nik Storonsky, founder of the neobank currently valued at $33 billion after a round led by SoftBank and Tiger Global in July 2021. The digital bank has a base of 18 million customers across 35 countries.
To lead the Brazilian subsidiary, Revolut hired Glauber Mota, a former partner at investment bank BTG Pactual, who has structured the bank’s digital retail operation and led its private banking business in Switzerland. The executive joins Felipe Lachowski, who leads the company’s strategy and operations in Brazil, and a team of 10 employees.
With plans to accelerate recruitment in the coming months and create a technology hub in Brazil, the British neobank is not afraid of the local competition. In an interview with Startups, Mota said the Brazilian market is still very inefficient in segments Revolut already has a strong presence.
“There is no doubt that Nubank stands out. Other market entrants are trying to offer foreign exchange solutions and opening accounts for their clients abroad. But they are all local companies looking to expand outside Brazil, while we are bringing a relevant competitive advantage”, says the executive.
“We are coming at the other end of the spectrum; we are already present in dozens of global markets and have a mature product. We are the first successful case of a super app outside of China, and stand out from any player trying to do this in Brazil,” he adds.
A phased approach
Revolut expects to launch in Brazil before the World Cup in November, starting with a global account. For example, the offering should enable customers to buy currencies such as the US dollar for later use with automatic conversion to over 25 currencies. According to Mota, the product is an alternative for Brazilians paying high fees to use credit cards and buying foreign currency when using e-commerce sites or traveling abroad.
“The foreign exchange segment in Brazil still applies very high spread rates, and for the small client who wants to exchange small amounts, it is even worse, as only large clients have access to better rates. Revolut is democratic in that regard,” he adds.
Investments in international stock exchanges and a cryptocurrency offering, which Mota describes as much more user-friendly than most available alternatives, are on the post-launch roadmap. “Considering [Brazilian fintech] Mercado Bitcoin, which specializes in crypto, our experience is unparalleled and much better,” the executive says.
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“We see a very high demand in the crypto space. We will bring a relevant solution to this segment, which many Brazilian players try to emulate. We will also have a solution that will enable direct access to investments abroad – which some Brazilian companies also offer. Still, we will deliver everything in a single app with a superior experience”.
Other services Revolut customers in Brazil will have access to in the future include a proprietary cashback travel booking solution supported by global partnerships such as major hotel chains. In addition, Revolut Junior, a gamified financial education product in which parents can, for example, reward teenagers and children for household chores through the app, is also in the pipeline.
According to Mota, an insurance offer and a business account, with services such as payroll management, are also among the services on the horizon. “The end game is to bring the complete Revolut experience to Brazil, under a phased approach: we will start with [the global account] offering, which is our specialty abroad, and we will add to the portfolio of features”, he explains.
Potential acquisitions
Unlike other players about to enter the Brazilian market – such as N26, whose banking core in Brazil is developed by techfin Pismo – Revolut develops its own technology. According to Glauber, proprietary technology allows for a more agile launch. “[Brazil] is an addition to our global platform, we’re making customizations to adapt to local rules, but we don’t have to do everything from scratch,” he says.
Revolut’s focus on doing core tasks in-house doesn’t mean the firm is averse to acquisitions. Last month, the neobank bought remittance firm Arvin Forex to speed up regulatory compliance and the overall operation in India, for example.
“We don’t rule out the possibility of making acquisitions in Brazil either, but this is something that will come over time. Since we have the global platform to get off to a great start, we will over time plan how best to speed things up here,” says the executive. According to Mota, options in Brazil include acquihires (acquisition method in which a company buys the talent of another), mainly in the technology space.
Revolut’s biggest challenge over the coming months, according to the chief executive of the Brazilian operation, is “attracting the right talent to a group that has an appetite for creating a large team” and the competition for the best professionals. “Other players want the same talent as us, and our bar is high, so there is a hiring challenge,” Mota points out.
In addition, the company will need to ensure that its offer meets the demands of Brazilian consumers. To do this, the operation led by Mota will create a committee of initial clients, which will support a strategy focused on the uptake of the neobank’s offering and the detection of areas for improvement. “We will carry out thorough testing with the first customers to ensure the solution will be in good shape when we hit the market,” he concludes.
