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Revolut and N26 both announced expansion plans amid the coronavirus pandemic

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UK-based neobank Revolut and Germany-based neobank N26 each revealed ambitious growth plans earlier this week — even as the coronavirus pandemic dents their revenue and operations, highlighting potential silver linings to the crisis.
N26's Rising Number of Users
Both neobanks have felt preliminary impacts of the coronavirus pandemic:
  • N26 saw a dip in user growth in March, though it also reported a rebound in signups in regions that were a few weeks into lockdown, per CNBC. N26 is cutting costs as a result, including on marketing, placing 150 employees on a wage subsidy program, and a 25% pay cut for the two cofounders. Meanwhile, CEO Valentin Stalf told CNBC that the neobank has seen more people "bank from home" and that its ATM withdrawals have been halved in all major markets, while e-commerce transactions have grown dramatically among customers 65 and up. Those behavioral changes might ultimately benefit N26 as more consumers get accustomed to banking remotely.
  • Revolut has seen a "substantial" hit to its revenue thanks to lowered card transactions amid lockdown measures, per the Financial Times. Neobanks often generate interchange revenue through their debit card — but that places them at the whim of their customers' swiping habit, squeezing revenue when customers aren't spending consistently. Revolut hasn't yet cut staff as a result of the declines, though it has asked some employees to swap a portion of their salaries for shares in an attempt to conserve cash. 
But the neobanks aren't letting the pandemic-related setbacks disrupt their expansion plans:
  • N26 raised an additional $100 million in an extended Series D and still has its sights on international expansion. The neobank's valuation remains unchanged at $3.5 billion. Stalf told CNBC that it decided to raise the further capital to prepare for the the next two to three years and getting through the coronavirus crisis. Some of the money could also support its international expansion plans: Stalf said there's "definitely" a chance N26 could reenter the UK in the future, after withdrawing earlier this year due to Brexit concerns. For now it's prioritizing its longstanding expansion plans in Brazil, which Stalf said is a much bigger opportunity than the UK. And it's also focused on the US, where it launched last year and now counts over 250,000 users. International growth has been central to N26's strategy, and it's clear that it plans to continue with that strategy despite the current crisis.
  • Revolut intends to acquire other tech companies with some of the $500 million it raised in February, which valued it at $5.5 billion. The neobank is looking for companies that have been hit by the pandemic, which Revolut CEO Nikolay Storonsky told the FT provides "a real opportunity" for Revolut, despite the revenue losses. Revolut initially launched as a travel-focused prepaid card, and Storonsky said the firm is targeting deals in that space, like travel aggregation platforms, which could allow customers to buy flights or rent cars through the Revolut app once travel restrictions are lifted. This fits into the neobank's broader expansion effort beyond the crisis: Revolut is reportedly planning to offer credit cards in the UK after applying for a consumer credit license. And the neobank will likely use the remaining funding to continue its aggressive expansion goals, like a full US rollout and plans to reach 56 markets worldwide, as well as a further expansion into business banking.
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https://www.businessinsider.com/revolut-n26-move-forward-with-expansion-goals-amid-pandemic-2020-5?IR=T

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