Revolut’s ambitious 2025 strategy with AI, smart ATMs, & major credit push ??; N26 achieves first profitable quarter ??; Nubank to move to the UK?? ??

?? Hey, Linas here! Welcome to a ?? weekly free edition ?? of my daily newsletter. Each day I focus on 3 stories that are making a difference in the financial technology space. Coupled with things worth watching & most important money movements, it’s the only newsletter you need for all things when Finance meets Tech.

If you’re not a subscriber, here’s what you missed last week:

1. AI 100: Top Artificial Intelligence Startups of 2024 ???? [these companies raised $28B already. Find whose backing them, unlock their exclusive pitch decks & learn from the best ??]
2. The ultimate list of resources for building and scaling billion-dollar companies ?? [1,500+ pages of knowledge, data and advice to launch & scale your next unicorn startup in 2025]
3. Brazil's Super App pioneer Inter hits inflection point as profitability takes flight ???? [unpacking their most important Q3 2024 numbers, what they mean, what’s next & whether Inter is worth your time and money now + bonus deep dive into its biggest competitor]
4. Apple & other Big Tech's digital wallets can soon be under banking-style oversight ????[why this matters & what this means for the future of FinTech + bonus deep dives on Apple & co]
5. Robinhood's $300M TradePMR acquisition signals a huge push into wealth management ???? [why it matters & what’s next for Robinhood + bonus deep dive into their latest financials AND 5 M&A templates that can save you billions]
6. Mastercard and JPMorgan unite to transform cross-border payments through blockchain ???? [what’s the USP here & why it’s important + bonus deep dives both into JPM & Mastercard]
7. Revolut hits 50M users milestone, secures UK trading license in major growth push ???? [what it’s all about, why it matters & what’s next for Revolut + a deep dive into its biggest global competitor]
8. JPMorgan UK makes strategic move into credit cards ?????? [what it tells us & what we can expect next + bonus deep dives into JPM’s latest financials & more bonus reads inside]
9. Goldman Sachs is spinning out its digital assets platform ???? [what it means & why it matters + bonus deep dive into Goldman’s latest financials & latest numbers on all things digital assets]
10. Credit card delinquencies show signs of stabilization ?? [what the latest data tells us, what this means for FinTech & what to expect next]

and more! Don't miss out and join the community here????

Last week (18-22 November) was another wild and really intense week in Finance 2.0. We will look into Revolut that just laid out its ambitious 2025 strategy (how AI, smart ATMs, & major credit push fit into Revolut’s play, why it matters for FinTech & banking industry + bonus reads on Revolut & co); German digital challenger bank N26 which just achieved its first-ever profitable quarter (why it matters + what’s next for N26); Nubank that’s thinking to move to the UK (what’s the rationale behind & what it implies + bonus deep dives into NU & co), and explore other interesting news and developments.

Without further ado, let us dive into what happened in the new age of finance last week. Let’s connect the dots.

Revolut’s ambitious 2025 strategy with AI, smart ATMs, and major credit push ????

The news ??? British FinTech giant Revolut just announced a comprehensive expansion of its services for 2025. The London-based FinTech unicorn, which has already transformed how 50 million customers interact with financial services, is setting its sights on bridging the gap between digital and physical banking while leveraging artificial intelligence to enhance user experience.

Let’s take a quick look at this.

More on this ?? At the heart of Revolut's strategy is an AI-powered assistant designed to help customers navigate their finances and personalize their banking experience. This move represents a significant step beyond traditional banking apps, positioning Revolut ahead of conventional banks that have been slower to embrace advanced technologies.

The company's physical presence will expand through the introduction of innovative "smart ATMs" in Spain, featuring not just cash dispensing capabilities but also card issuance and planned facial recognition authentication. This hybrid approach could revolutionize customer onboarding and security, though it will need to carefully navigate European Union data protection regulations.

Last but definitely not the least development from Revolut is that it plans to enter the mortgage market, promising ambitious turnaround times for loan approvals. The rollout will begin in Lithuania before expanding to Ireland and France.

The company is also strengthening its business services with new credit products, savings accounts, and "buy now, pay later" options for merchants.

?? THE TAKEAWAY

What’s next? ?? First, we must note that Revolut's smart ATM initiative suggests that purely digital banks are recognizing the value of physical touchpoints. This hybrid model could become the new standard for FinTech companies seeking to expand their market share. More importantly, the focus on AI-powered assistance indicates that personalized, intelligent banking services will become a key battleground. Traditional banks may struggle to keep pace with this technological evolution, potentially accelerating the shift of customers to fintech platforms. Lastly, by moving into mortgages and business credit, Revolut is clearly and strongly positioning itself as a full-service financial institution. This could pressure traditional banks to accelerate their digital transformation efforts or risk losing market share in their most profitable segments. Looking ahead, we will definitely see increased competition in the AI banking assistant space, with other FinTech companies and traditional banks racing to develop similar capabilities (NU, Inter, and Klarna are already doing this). As an effect, we should also expect a potential wave of partnerships or acquisitions as banks (& maybe Big Tech) seek to quickly acquire technological capabilities to compete. Finally, watch out for greater regulatory scrutiny, particularly around biometric authentication and AI-driven financial advice as this can become the key focal point for many.

ICYMI: Revolut hits 50M users milestone, secures UK trading license in major growth push ???? [what it’s all about, why it matters & what’s next for Revolut + a deep dive into its biggest global competitor]

German digital challenger bank N26 achieves first-ever profitable quarter ??????

The news ??? German digital bank N26 has marked a significant turnaround in its operations, reporting its first-ever quarterly profit in Q3 2024 following the lifting of regulatory restrictions that had previously limited its growth.

The milestone comes as the Berlin-based FinTech demonstrates strong customer acquisition and revenue growth, signaling a new chapter in its evolution from a challenging regulatory period.

Let’s take a quick look at this and see what’s next for N26 .

More on this ?? The bank, last valued at a whopping $9 billion in 2021, posted a net operating income of €2.8 million in Q3 2024, having achieved monthly profitability since June 2024.

This marks a dramatic improvement from its 2023 performance when it recorded a net loss of €102.4 million – itself a significant reduction from the previous year's €213.4 million loss.

N26's growth has accelerated substantially since German regulator BaFin lifted customer acquisition restrictions in June 2024. The bank is now onboarding more than 200,000 new customers monthly, a stark contrast to its previous cap of 60,000. This surge in growth has contributed to projected gross revenue of €440 million for 2024, representing a 40% increase from 2023. Nice! ??

Notably, the bank has diversified its revenue streams, with interest-related income now accounting for 50% of total revenue, up from 40% in 2023. Customer deposits have exceeded €10 billion for the first time, strengthening the bank's lending capabilities.

The company maintains impressive organic growth, with 73% of new customers acquired through word-of-mouth referrals in 2024.

?? THE TAKEAWAY

What’s next? ?? First and foremost, we must note that the company's recovery suggests that digital banks can successfully navigate regulatory challenges while maintaining growth. However, N26's journey also highlights the importance of balancing rapid expansion with robust compliance frameworks – a lesson that could shape the growth strategies of other fintech companies. For the perspective, one must note that the German challenger invested around €100 million in compliance infrastructure alone since 2022. That said, this transformation could influence investor sentiment toward FinTech companies, potentially leading to increased focus on sustainable growth and regulatory compliance rather than just customer acquisition metrics. Looking ahead, N26 is likely to focus on several key areas:

• Product Diversification Strategy: the bank's expansion into business banking, mortgages, and investment products suggests a shift toward becoming a full-service digital financial institution. This trend could accelerate consolidation in the FinTech sector as players seek to offer comprehensive financial services.
• AI Integration: N26's plans to leverage AI for customer service, projecting a 50% cost reduction in this area over five years, may herald a broader industry shift toward AI-driven operational efficiency.
• Geographic expansion, particularly in Eastern European markets.

The latter would be especially interesting if say both Revolut and N26 would start offering mortgages in Eastern Europe, where there’s so little competition. Interesting times head.

Nubank to move to the UK? ????

The news ??? In a move that could reshape the global FinTech landscape, Brazilian digital banking giant Nubank is considering relocating its legal domicile to the United Kingdom while maintaining its operational headquarters in S?o Paulo.

The discussions, which emerged during the G20 summit in Rio de Janeiro, signal a potential major win for the UK's aggressive push to attract leading technology companies post-Brexit.

Let’s take a quick look at this.

More on this ?? Currently domiciled in the Cayman Islands and listed on the New York Stock Exchange, Nubank has been working closely with British authorities on the potential move. The bank's meteoric rise has made it Latin America's most valuable financial institution, with its stock value surging approximately 60% since the beginning of 2024.

The timing of these discussions coincides with several strategic initiatives by Nubank, including its recent partnership with Nasdaq for regulatory reporting and the acquisition of data intelligence firm Hyperplane to advance its AI-first strategy.

Zoom out ?? The digital challenger bank has achieved remarkable growth, becoming the first digital banking platform outside Asia to surpass 100 million customers, with approximately 92 million in Brazil, 7 million in Mexico, and 1 million in Colombia.

For the UK, securing Nubank's legal domicile would thus represent a significant victory for Prime Minister Keir Starmer's Labour government, which has been actively courting technology firms despite implementing various tax increases, including raising the national insurance payroll tax to 15%.

The government has also established a Regulatory Innovation Office to streamline approval processes for novel technologies.

?? THE TAKEAWAY

What’s next? ?? First and foremost, this move could establish a new precedent for how large FinTech companies structure their global operations, potentially creating a blueprint for others to follow. The UK's regulatory environment might therefore become increasingly attractive to other fintech giants seeking a sophisticated legal framework while maintaining operational bases in their primary markets. Additionally, Nubank's presence in the UK could accelerate the cross-pollination of FinTech innovations between Latin America and Europe. The bank's successful model of serving traditionally underbanked populations could provide valuable insights for European financial institutions. But above all, the most interesting here would be market expansion opportunities. While Nubank has already achieved significant success in Latin America, a UK legal domicile could facilitate easier expansion into European markets and strengthen its position for global growth. This could also provide better access to European institutional investors and capital markets. And this would be huge ??

Extra Reads & Quick Bites for Curious Minds ??

• TrueLayer Cuts 25% of Staff Amid Profitability Push ?? TrueLayer, an open banking vendor, laid off 25% of its staff in September to drive profitability. The London-based firm cut 71 roles just before announcing a $50M funding round that reduced its valuation by 30%, losing its 'unicorn' status. Employees were informed with short notice and left the same day. TrueLayer reported a ￡55.6M pre-tax loss for 2023 but saw significant revenue and gross profit growth. Sad and disappointing - that’s not how you do things…
• European Banks Use GenAI for Better Inflation Forecasting ?? The Bank for International Settlements, European Central Bank, and Deutsche Bundesbank are collaborating on Project Spectrum to enhance inflation forecasting using generative AI. The project aims to process vast, unstructured consumer price data more efficiently. By categorizing product descriptions and price observations, GenAI could improve inflation nowcasting. Initial experiments will map data to standardized expenditure categories, with potential global applications.
• Google Pay Adds Afterpay and Klarna for BNPL Options ??? Google Pay is integrating with Klarna and Afterpay to offer Buy Now, Pay Later (BNPL) options in the U.S. Starting next year, Klarna will provide interest-free installments on purchases over $35, with financing options and management features within the Klarna app. Similarly, Afterpay will be available at select merchants. These partnerships aim to give consumers more payment flexibility and help merchants drive growth. ICYMI: Swedish FinTech giant Klarna files confidentially for a US IPO ?????? [why it matters for Klarna & why it’s BIG for FinTech in general + more bonus dives into Klarna & co]

Money Moves ??

• OpenLayer, a crypto-AI startup co-founded by three former Robinhood employees, has raised $5M in a seed funding round.
• Atome Financial has secured a syndicated credit facility of up to $200M, expected to accelerate financial inclusion in Southeast Asia.
• Colombia-based fintech Addi has obtained a $100M credit facility from Victory Park Capital, with the funds assisting its financing of credit originators in the region.

Continue reading by subscribing to Linas's Newsletter. You will receive fresh news about FinTech with hot takeaways every day.

P.S. You might enjoy my earlier pieces as well:

?? Top Resources for Startup Founders, CEOs, Investors & VCs ??

?? The Future of Finance: 10 FinTech & FinServ M&A predictions for 2024 ??

?? 10 FinTech and Finance stocks to include in your portfolio for 2024 ?? | Part I

?? The Future of Finance: 10 FinTech & FinServ M&A predictions for 2024 ??

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About: I am a business developer, sales professional, and FinTech strategist, as well as a Cryptocurrency and Blockchain enthusiast. I'm highly passionate about Financial Technology and Digital Innovation and strongly believe that it will change the world for the better. Apart from my daily job at the world’s leading digital asset infrastructure startup where I’m responsible for revenue operations, I'm an active member of the FinTech community and a TechFin evangelist.

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