Subscription Banking : How Revolut Superapp is bundling business services via subscription

Aditya Kshirsagar | Mon 21st Mar, 2022

Their branding goes like this

One app, all things money

But the key feature of such supperapp is subscription.

Revolut earns 29% of its revenue through subscriptions

They saw subscriptions to metal and premium plans increased by 51%, outpacing overall customer growth. That shows the propensity of customers to pay towards subscriptions, once they have experienced your platform.

Revolut has cracked the retail market. Here is a snapshot of their 2020 YoY performance. 2021 is not available.

  • Revenue up 57% to £261m
  • Gross Profit up 215%
  • Operating losses reduced to £6m from £25m
  • Customer balances up 96%

Revolut Business

Apart from international expansion in India, the key focus area for Revolut is SMBs and freelancers.

Revolut Business has grown 10x between 2018 to 2020

And such growth ties up with Revolut Business branding

The financial super app for all things business

Business Subscriptions

Revolut Business is an inspiration when it comes to subscription bundling. They have bundled everything around their cards. Their plans are

Subscription plan

Apart from the payments and banking features, they have bundled diverse services in their plans. It’s clear that Revolut is trying to touch every aspect of SMB business through subscription banking.

When subscribed, you get tons of benefits

  1. Rewards via cashback and discounts through partners. Revolut is leveraging its distribution to build engagement. Partners get access to Revolut distribution, thus they save on marketing. These savings are partly passed on to Revolut customers. Businesses save money, merchant partners get additional business and Revolut earns a commission. Win Win Win. Let’s look at Revolut’s partner ecosystem

a) Finance Finance

b) Marketing Marketing Rewards

c) Travel Travel

d) Legal Legal rewards

e) Operations Operations rewards

  1. Business APIs: Custom Integrations for business at one place
  2. Expense and Payroll management: Manage receipts, issue debit cards, track expenses, get notifications
  3. Subscriptions: All in one platform a. Track all business recurring payments at one place. Services include, online ads, cloud services, and subscriptions to business softwares b. Start or Pause or Stop subscriptions through Revolut Business app. Get notifications if you are overcharged
  4. Marketplace to connect everyday business applications to revolut accounts. This helps in automating accounting and reconciliation

Revolut Tools

Subscriptions require bundling numerous features.* More the bundling, better the offer looks, and more businesses subscribe.* But businesses can’t build such features by themselves. Revolut as well has built few tools in-house while choosing to partner with third parties to build scale for adjacent use cases. Some of the features required payment over and above subscription charges.

In-House Tools

  • On Demand Pay for SMB employees to withdraw accrued earnings. It’s an advance salary.
  • Create, send, collect and manage Invoices. They have also added reconciliation capabilities as well
  • Expense management through company issued debit cards. These also help in bookkeeping
  • Business APIs to integrate diverse business tools with Revolut to automate businesses

Partner Ecosystem

  • Payment plugins for eCommerce solutions which help you create omnichannel experience. Example: WooCommerce (Adobe subsidiary), PrestaShop
  • Automation tools like Zaier, Slack,Integromat
  • Automate accounting through tools like Quickbooks, Freshbooks, Xero, etc
  • Expense management tool like Xero and much more

Why should banks implement subscription banking?

Traditional banks lead with trust and have huge distribution. Consumer tech companies have to spend billions of dollars to build such distribution. So why not leverage that distribution to build engagement and Higher Revenue Per Active Customer? Banks understand the superapp strategy but they also need to seamlessly integrate subscriptions into superapp ecosystem.

Advantages of subscription banking

  • Recurring Fee Income vis-a-vis one off fee income
  • Retention: More product per customers increases inertia to switch
  • Customer Acquisition: More use cases mean, bank’s offering becomes attractive. It will lead to new customer acquisition
  • Opportunity Cost of not having a subscription banking is too high. Missed opportunity, will be grabbed by the competition.

The story repeats!

It’s not just Revolut. TinkOff (Russia), Nubank (Latin America), N26 (Europe), and Open (India) are just a few examples of new age digital banks focussing on business subscriptions. Unfortunately, in these fast moving businesses, profits accrue to the top 25%le. Thus, banks need to move fast.

In Subscription Banking, speed matters


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