April 26, 2018 / 6:13 AM / 21 days ago

Revolut becomes Britain's first digital bank unicorn

LONDON (Reuters) - Financial technology firm Revolut said on Thursday its valuation had jumped by five times in a year to $1.7 billion at its most recent funding round, making it the first of Britain’s digital-only banks to reach unicorn status.

FILE PHOTO: A view of the London skyline shows the City of London financial district, seen from St Paul's Cathedral in London, Britain February 25, 2017. REUTERS/Neil Hall/File Photo

Revolut, which is in the process of securing a banking license and currently offers its nearly two million users a pre-paid card, app and cheap foreign exchange, said it had raised $250 million in its third funding round, well above the $66 million it raised last July.

The round was led by Hong Kong-based venture capital firm DST Global, alongside other new and existing investors including Index Ventures and Ribbit Capital.

Revolut, one of a number of app-only banks that have sprung up in Europe in recent years, said it will spend the funds on worldwide expansion starting in the United States, Canada, Hong Kong and Australia in 2018 and on more than doubling its current headcount from 350 to 800 by the end of the year.

Like its peers, it hopes to challenge traditional lenders by offering increasingly tech-savvy consumers quick and easy digital money management tools, cut-price fees and a “marketplace” where users can shop around for products from various providers.

It has stormed ahead of rivals in terms of user numbers and investor backing, dwarfing the valuation of its closest British rival Monzo, which is valued at 280 million pounds ($390.29 million) and is yet to break 1 million users.

“Our focus, since we launched, has been to do everything completely opposite to traditional banks,” said Revolut founder and CEO Nikolay Storonsky.

“Banking has historically avoided disruptions by technology, but that is all about to change on a big scale.”

Fintech companies have enjoyed growing popularity amid demand for more digital and personalized services, threatening some of the key revenue streams for big banks.

They are yet to steal significant numbers of customers or income from their established rivals, but are set to benefit from a further boost in the coming years thanks to changes to regulations aimed at stimulating competition in financial services.

Revolut, which makes money from paid-for premium and business accounts, said it was adding between 6,000 and 8,000 new customers everyday. It became the first digital-only bank to break even on a monthly basis earlier this year.

It wants to acquire 100 million users in the next five years.

($1 = 0.7174 pounds)

Reporting by Emma Rumney, Editing by William Maclean

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