Revolut is advancing plans for a soft launch of Irish mortgages before a full roll-out towards the end of the year, as it seeks to challenge the three main banks’ grip of their most important line of business.
The UK-based financial technology group began market testing in Lithuania, home of its euro zone banking licence, earlier this month and has issued some home loans there, Joe Heneghan, chief executive of Revolut Europe, told The Irish Times after the group published its annual report for last year.
“I’d say it would probably be Q3 [third quarter of the year] for the testing and Q4 for the launch in Ireland,” he said.
While Revolut had envisaged last summer that the Irish launch would take place in the second quarter of this year, Mr Heneghan said it was often difficult to predict so far in advance exactly when a project will launch. “I wouldn’t say there has been any surprise in the process,” he said.
Revolut initially plans to start offering Irish home loans directly through its app, supported by staff over the phone because of the complexity of mortgage underwriting, he said. The company may in the future “explore” also using brokers, he said. Brokers account for about 47 per cent of the volume of home loans being written in the State.
“We think the mortgage process that customers go through at the moment [generally] is unwieldy and can be made a lot slicker,” Mr Heneghan said.
Revolut’s three million Irish customers will present a big opportunity to market its mortgage offering and take on the three Irish banks that accounted for 92 per cent of €12.6 billion of mortgages issued last year.
Others also trying to loosen the banks’ stranglehold on mortgages include Avant Money, ICS Mortgages, which has become more active in the last year, and new entrants Nuá Money and MoCo.
Mr Heneghan also signalled that Revolut would compete on price – even if it has not yet made any decisions on rates – as it sets its initial sights on the loan switcher market.
The European Central Bank (ECB) is cutting interest rates, which had reached 4 per cent last year.
Revolut, which has staff across 42 countries and more than 50 million customers, recorded a jump in net profit of 129 per cent last year to £790 million (€922 million), driven by card fees and interest earned on surplus deposits placed with central banks.
Group revenues rose by 72 per cent to £3.1 billion. The biggest contributor was net interest income as Revolut placed more of its growing excess deposits with central banks, including the ECB.
Revenues from card payments, foreign exchange, wealth products and subscriptions for various plans – which are as expensive as €55 a month for its Revolut Ultra card – also advanced.
The capacity Revolut has for lending is underscored by it having £22.3 billion of customer deposits internationally on its balance sheet at the end of last year, but less than £980 million of loans, most of them personal loans.
The UK’s national reporting centre for fraud and cybercrime, Action Fraud, received more complaints of Revolut customers being targeted by fraudsters than any other financial institution in 2023, the BBC reported last October, citing information received on foot of a freedom of information request.
Revolut is also known to be more resistant to giving refunds than mainstream banks when customers are caught out by scammers, industry observers say.
Mr Heneghan said Revolut “invests a huge amount of time and energy and money in the fight against financial crime and fraud”. He said the group was deploying “increasingly sophisticated” IT systems to protect customers.
The company said it prevented an estimated £600 million of potential fraud through enhanced controls last year and that its customer service efficiency also improved, “achieving 80 per cent faster resolution times”.
