When chief executives are trying to appear polite but can’t quite cover up their uneasiness, they give competitors a certain type of flattery. Revolut has received the compliment from Jamie Dimon on multiple occasions. The CEO of JPMorgan has been liberal in his public recognition of the London-based neobank’s growth pace and execution. Some observers pointed out that this is more generous than one would anticipate from someone managing a bank with $3.9 trillion in assets and no clear motive to support a rival. Following those remarks, there was typical and persistent industry chatter: is Dimon watching Revolut because he’s considering purchasing it?
The figure at the beginning of the Revolut takeover JPMorgan thesis is hard to ignore. 70 million clients in over 40 countries, and millions more are being added at a rate that organic growth cannot match for legacy banks. Investors believe Revolut’s mobile-first financial super-app strategy, which includes currency exchange, investment, cryptocurrency, insurance, and daily banking, is worth more than the majority of publicly traded European financial institutions, as evidenced by its $75 billion private market valuation.
For a bank like JPMorgan, which has made significant investments and had varying degrees of success in developing digital products that appeal to younger, globally mobile consumers, those figures point to a particular issue with client acquisition that Revolut has already resolved but JPMorgan has not.
Finn is the most informative data point in the recent digital history of JPMorgan. Finn was JPMorgan’s attempt to create the kind of seamless, app-first banking experience that neobanks had been providing for years. It was released in 2018 as a stand-alone mobile banking app targeted at younger consumers. It didn’t work. There was no crisis or scandal, so it didn’t happen dramatically. Instead, it happened quietly, the way things fail when they can’t find an audience willing to change from what they currently have.
In 2019, Finn was closed. Building a truly mobile-native financial culture from within a legacy bank is more difficult than it seems because the culture, technology stack, and regulatory architecture of a legacy institution all work against the kind of rapid iteration that made Revolut what it is. The lessons from that experience are presumably still alive in various internal strategy documents, and they point to something that the Revolut takeover JPMorgan conversation keeps returning to.
Revolut was designed to cater to a particular type of client that traditional banks have consistently failed to serve: the freelancer who divides their time between London and Lisbon, the remote worker who is paid in dollars but spends in euros, and the foreign national who manages several currency risks from a single phone. These clients have always existed, but prior to neobanks, they had no viable choice but to either pay exorbitant foreign currency costs at their high street bank or put together a patchwork of accounts spanning jurisdictions that no customer support team could handle comprehensively.
In doing so, Revolut created a customer base with demographics that every major bank’s marketing team would recognize as highly desirable: young, globally mobile, digitally engaged, and relatively early in their wealth accumulation journey. Revolut did this in an elegant and economical manner.
The regulatory aspect of any prospective Revolut acquisition of JPMorgan is the point at which the situation gets sufficiently complex to deter serious dealmakers. Regulators on several continents would be interested in a $75 billion acquisition of a financial services firm that has substantial operations in the UK, Europe, and an increasing number of other markets.
After granting Revolut its long-awaited full banking licence, the UK’s Financial Conduct Authority might have opinions about a US mega-bank purchasing a recently licensed British institution. Given JPMorgan’s size and systemic significance, US banking regulators would closely monitor any significant purchase. These obstacles might be overcome. They might also be prohibitive, which could contribute to the topic staying at the level of industry rumors rather than documented transaction talks.
Revolut’s own actions point to a business that isn’t looking to be acquired. Instead of being an add-on to something bigger, the UK banking licence, which is obtained through a multi-year regulatory process, signifies a commitment to functioning as an independent organization. The company is not prepared for an easy exit; rather, it is developing toward an IPO or prolonged independent operation, as evidenced by its expansion into Mexico, ongoing product development across the investment and insurance verticals, headcount growth, and geographic push.
As this develops, it seems that the Revolut takeover of JPMorgan story is more about the competitive anxiety of legacy banking than it is about any actual deal process. It’s a thought experiment that shows how uneasy the biggest traditional banks have become with the territory they’ve given up to businesses that were founded from scratch and never had to bear the burden of what came before them.
