Focus: Martin Gilbert wants the app to have a full banking licence
City grandee Martin Gilbert has played golf with top professionals including Rory McIlroy and Phil Mickelson over the years. But one playing companion stands out – and not for his touch around the green. His name is Donald Trump.
‘The last time I saw him was after he was the nominated [Republican presidential] candidate about five years ago,’ says Gilbert, who made his name establishing fund giant Aberdeen Asset Management in 1983.
‘I think it’s his passion, you know…and he’s actually a good golfer.’ Gilbert, 65, hesitates when I ask who used to win: him or Trump? ‘I would let him win,’ he quips.
The Scottish entrepreneur stepped down as vice-chairman of FTSE100-listed Standard Life Aberdeen in May. But instead of filling his time working on his putting, Gilbert has a new goal: he’s trying to turn Britain’s most valuable tech start-up, Revolut, into a one-stop shop for all your finances.
The app was created in 2015 by former bank traders Nikolay Storonsky and Vlad Yatsenko. Based in London, it started off as a travel card providing low-cost foreign currencies, undercutting the banks.
Since then, it has attracted more than 13million customers. It has branched into share trading, insurance products and commodities including gold. It has expanded globally, spanning Europe, North America, Asia, and Australia and is now estimated to be worth $5.5billion (£4.1billion), making it one of Europe’s most prized tech start-ups.
‘Our aim is to be the global super app,’ says Gilbert. ‘America is important…Japan could be big for us as well.’
Gilbert, who started his role as chairman in January, is on board to guide Revolut through its next crucial phase: it will attempt to launch banking services, such as savings accounts and loans, in the UK and US.
But does the move risk Revolut becoming just another bank, when its aim was to offer an alternative?
‘We’ve set out to disrupt the banks, yes, that’s correct. But you do want to be a bank yourself, it’s more advantageous than not. It would help us enormously, I think, to be our customers’ major bank account, to actually be a bank.’
Gilbert says Revolut hasn’t yet applied to the watchdogs for a banking licence. The first goal is to turn a profit. Last year, Revolut saw losses hit £107million, three times the losses from the previous year. Although income has increased, it had spent cash on hiring and expanding.
‘Our aim is to be profitable on a monthly basis at some point next year,’ reveals Gilbert. ‘We’re being tough on costs at the moment, and just making sure we have sufficient capital to run the business without having to raise more money.’
Only a handful of tech-focused finance start-ups, including Transferwise and OakNorth have turned a profit. Starling Bank, another upstart, broke even in October.
‘If we start applying for [bank] licences and we need more regulatory capital, we would have to raise more money,’ Gilbert says. ‘But again, that’s much easier if you’re profitable, so what I would say is we don’t need to raise any more capital at this point in time.
‘Bear in mind that any application takes 18 months to two years. So it pushes out the need for raising any money for a period of time.’
Revolut has not been immune to the pandemic, its income is closely linked to travel and spending on cards. Although it already offers loans in Lithuania, Gilbert is cagey about whether Revolut will do the same in the UK to boost revenue.
‘I think it’s been a good time not to be in lending during this sort of economic downturn,’ he says. ‘It’s something we would look at, but again, cautiously. Lending is great as long as people pay you back.’ Known as a charming schmoozer in the City, Gilbert’s reputation and bulging contacts book will boost Revolut’s fundraising prospects.
He co-founded fund giant Aberdeen nearly four decades ago, before it listed on the stock exchange in 1991. Aberdeen was hit by the collapse of split capital trusts in the early 2000s, which left thousands of investors out of pocket.
Gilbert led Aberdeen through an £11billion merger with Standard Life in 2017, taking on an awkward co-chief executive position with Keith Skeoch. He was brought in to Revolut in 2019 to help advise, leading to his position as chairman.
‘It’s a bit like going back, I suppose, to Aberdeen, when I first started,’ Gilbert reminisces. ‘It’s definitely still got that feeling of being a small company. I suppose because I was sort of regarded as a bit of an entrepreneur in the fund management sector, it was thought I might be able to work with Nikolay, which I find very easy to do. But I also had the experience of working with shareholders and regulators worldwide. So I thought I could help.’
Gilbert has other roles to juggle. He has been on the board of oil giant Glencore since 2017 and was appointed chairman of investment firm Toscafund earlier this year. He also joined the board of wealth firm Saranac Partners. How does he find the time?
‘I think if I were still an executive, it would be difficult. But when you’re a non-executive, when you don’t have a full time job, it’s much easier. The only problem is, you don’t realise how difficult it is not being part of a support function. You’ve got to fix up your own printer and stuff like that.’
Gilbert is talking from Switzerland, where he has just had a Glencore board meeting, and is embracing the tech entrepreneur look: he has grown more stubble and has gone tie-less. ‘Everything’s open in Zurich, it’s nice.’ It’s too cold for golf, though, he laments.
Keen: Martin Gilbert with golfer Rory McIlroy at a pro-am event in Scotland in 2017
Gilbert knows his Revolut project is not without its challenges. The app has come under fire for freezing customer accounts because of suspected fraud or money laundering.
Gilbert partly blames rules that mean upstarts including Revolut have to report suspicious transactions to the National Crime Agency and then lock the account for several weeks, leaving customers in the lurch. Banks, on the other hand, can close accounts immediately.
Gaining a banking licence comes with challenges, too, including extra regulation and independent boards. Revolut has beefed up its banking talent, bringing in former Standard Chartered banker Richard Holmes initially as an adviser. Former Goldman Sachs banker Michael Sherwood joined the board earlier this year.
Aside from banking, what else is Revolut planning to offer to make it a one-stop shop for customers? Could investment funds be on the cards, given Gilbert’s background?
‘It’s certainly an area that we’re looking at for the future,’ he says, hinting that cheap robot funds that invest in an index are more likely than more expensive stock-picking funds.
‘It’s more likely to go low cost,’ says Gilbert. ‘Our customers are definitely interested in cost.’
With Biden’s victory, might Gilbert see more of Trump? ‘He might have a bit more time, as you say, to play golf,’ says Gilbert.