TOKYO -- Financial technology companies in Asia face a new competitor, as British digital banking startup Revolut says it has entered the Japanese market with plans to expand elsewhere in the region.
Revolut, founded in 2015, is Britain's fastest-growing fintech player, with 2.8 million users across 28 markets in Europe. It arrives in Japan through a partnership with billionaire Hiroshi Mikitani's Tokyo-based e-commerce group Rakuten.
Revolut allows people to transfer and spend money in various currencies with no fees using prepaid cards and a mobile app, which also lets users track their spending and invest in cryptocurrencies and other financial products.
The service resembles what is available at Asian fintech companies such as Alibaba Group Holding affiliate Ant Financial and Japanese names Line and Money Forward. The biggest difference may be co-founder and CEO Nikolay Storonsky's determination to make Revolut a powerful global player.
He sees financial services following the pattern of the technology industry, with a few global giants dominating the marketplace. Storonsky wants to make Revolut one of them.
"Our big advantage is that we are not afraid of expanding outside, while Asian companies are much more conservative," Storonsky said in an interview with the Nikkei Asian Review. He was in Tokyo to participate in FIN/SUM 2018, an annual fintech summit sponsored by Nikkei.
Revolut CEO Nikolay Storonsky formerly worked for Lehman Brothers and Credit Suisse. (Photo by Takuya Fujsawa)
Storonsky knows his company will encounter fierce competition in Japan, Singapore, Hong Kong and India, where Revolut plans to make its services available by the end of the year. He intends to win with speed.
"Be as fast as possible and always stay ahead of the competition," the CEO said. "You always have to have in the pipeline certain things no one knows about, and when they copy you, you are doing new things."
"We always prefer to launch fast," he said. "That's why we are partnering with Rakuten" rather than going through the lengthy process of obtaining a banking license for Revolut.
Rakuten, which runs one of Japan's largest online marketplaces, looks to launch the country's fourth major mobile carrier. The group also includes Rakuten Securities, a big online brokerage.
The reputation of Japanese banks as being conservative and tradition-bound also prompted Revolut to target the country. "Banks are very bad here," Storonsky said.
Revolut first applied for approval in other Asia-Pacific markets such as Hong Kong, Singapore and Australia, but Japan granted a license for providing limited online services first. "It was extremely quick," Storonsky said. "The whole attitude toward innovation ... it is great."
The 34-year-old entrepreneur was born in Russia and studied at Moscow Institute of Physics and Technology, a top engineering university in the country, when he became attracted to finance. Storonsky moved to Britain in 2006.
"As a trader, I dealt with quite complex financial instruments. I liked it because it was intellectually rewarding," he said.
Storonsky worked for Lehman Brothers, then for Credit Suisse, but wanted to start his own business.
"I was a frequent traveler. I had some money abroad because I was an expat and had to pay banking fees" for transferring money, he said. "I tried to get rid of them first for myself, and later it was quite a good business idea."
In Japan, Revolut will focus first on travelers and expats, aiming to become popular through word of mouth. "We want to be a household name," Storonsky said.
The company is not profitable yet, focused instead on scaling up and gaining market share. "We are expanding. We are hiring a lot of people," the CEO said. "It's more like investment in the future. There is no point of slowing down growth."
As a digital bank, one challenge involves maintaining security for customer assets. In July, the company reported suspicions of money laundering on its digital payments system. Storonsky downplayed the incident, saying the company did what it was obliged to do under regulations. The company takes cybersecurity "extremely seriously" and considers it the top risk to its business, he said.
Storonsky also highlighted his company's adherence to customer protection. Revolut keeps customer data in a local server, instead of the data center in London, even if that means duplicate investments in each market, he said.
