UK’s Revolut targets South Africa’s growing fintech market

London-based fintech giant Revolut, the world’s fourth-largest digital bank, is exploring a potential launch in South Africa to reshape the country’s rapidly growing digital banking landscape. TechCentral reported that Revolut, which boasts over 50 million customers globally, is in the early stages of evaluating the South African market, with indications that it has applied for a full banking license.

If successful, this would mark the company’s first formal entry into Africa and could position it as a formidable competitor to both local digital banks and traditional financial institutions.

Founded in 2015 by Nikolay Storonsky and Vlad Yatsenko, Revolut began as a provider of low-fee foreign exchange services tied to a prepaid card. Over the past decade, it has evolved into a comprehensive financial “super app,” offering a broad suite of services that include multi-currency accounts, fee-free currency exchange, stock and commodity trading, cryptocurrency trading, and business banking tools.

With a valuation of $45 billion as of August 2024, the fintech’s ambitious growth strategy includes doubling its customer base to 100 million and expanding into new markets. 

“South Africa is a market we are evaluating, and one we see as attractive, with the potential to offer a unique value proposition to customers in the future. However, we are quite early in the process,” a company spokesperson told TechCentral.

Unlike South Africa’s existing digital banking players, such as TymeBank, Discovery Bank, and Bank Zero, Revolut brings a more diverse product portfolio that extends beyond personal banking. Its business banking offerings, including corporate cards and expense management tools, along with lifestyle perks like travel and device insurance, could appeal to a wide range of consumers and enterprises.

While Revolut operates in over 160 countries and regions, its services vary by market, and it remains unclear which features will be introduced in South Africa if the launch proceeds.

Revolut throws up stiff competition in SA’s fintech space 

South Africa’s fintech sector is already a competitive arena. TymeBank, the country’s first fully digital bank, has achieved unicorn status with a $1.5 billion valuation as of December 2024, bolstered by a $150 million investment from Nubank, the world’s largest standalone digital bank. 

TymeBank, which targets the lower end of the market, has amassed over 10 million customers since its launch in 2019 by offering no-fee accounts and partnering with retailers like Pick n Pay for cash access. Meanwhile, Discovery Bank, a spin-off of the Discovery Group, has carved out a niche in the middle and upper-income segments, surpassing one million customers by September 2024 with a suite of services that rivals Revolut’s, including multi-currency accounts and premium benefits.

Revolut’s potential entry comes at a time when South Africa’s fintech sector is gaining global attention. The market’s attractiveness stems from its relatively high banking penetration; about 85% of adults have accounts, combined with a growing demand for innovative, cost-effective financial solutions. However, Revolut will face stiff competition. 

TymeBank’s CEO, Coenraad Jonker, has highlighted Nubank’s investment as a strategic move to tap into Africa and Southeast Asia indirectly, suggesting that global fintech players see South Africa as a gateway to broader regional opportunities. Discovery Bank, with its established foothold among affluent clients, could pose a direct challenge to Revolut’s ambitions in the premium segment.

Implications for South Africa’s fintech sector

Revolut’s prospective launch could significantly disrupt South Africa’s fintech ecosystem. Firstly, its extensive product range could pressure local digital banks to diversify beyond personal banking. TymeBank and Bank Zero, which have focused on affordability and accessibility, may need to enhance their offerings to compete with Revolut’s multi-currency and investment options. 

Discovery Bank, already aligned with Revolut’s premium focus, might face intensified rivalry, particularly if Revolut introduces competitive pricing or innovative features like cryptocurrency trading—an area where South African banks have been cautious due to regulatory uncertainty.

Secondly, Revolut’s entry could accelerate the erosion of market share held by traditional banks such as Standard Bank, Absa, and Nedbank. With its digital-first approach and low-cost services, Revolut has disrupted legacy institutions in markets like the UK and Europe. In South Africa, where traditional banks still dominate but face criticism for high fees, Revolut’s fee-free currency exchange and trading capabilities could attract tech-savvy millennials and businesses seeking cost-effective alternatives.

Moreover, a successful South African launch could serve as a springboard for Revolut’s expansion across Africa, a continent with a young, mobile-first population and a burgeoning fintech scene. Currently, African users can access limited Revolut services without a local banking license, but a full-fledged operation in South Africa could unlock new growth avenues.

However, challenges abound. Securing a banking license from the South African Reserve Bank is a complex process, and Revolut’s lack of physical infrastructure, unlike TymeBank’s retail partnerships, could hinder its appeal in a market where cash remains prevalent. Additionally, regulatory scrutiny around cryptocurrency and data privacy could complicate its rollout.