Should you join the REVOLUTion? Yes - but not with your life savings just yet.

It’s hard to keep up with the breakneck pace of growth at digital bank Revolut. 

Recent reports of a tripling of Revolut’s global customer base to 10m in a year are already out of date. The Covid-19 lockdown saw another surge to bring this figure to 13m, Revolut revealed to us this week.

But as customers multipy, so do losses.

Revolut trebled pre-tax losses to €119m last year compared to 2018. Its UK rival Monzo recently warned that Covid 19 economic fallout threatened its very existence.

However, it’s not unusual for tech firms to lose money and sail close to the wind financially as they build their business. Facebook was worth billions before it made a cent - and then thrived by selling customer data to advertisers. 

I’m sure Revolut will also figure out a way to make money from 13 million customers.

The question is can it build on its attractive free banking and money/FX transfer proposition – while turning losses into profits?

And what does this mean for its customers?

In this climate, don’t expect any great new moneysaving deals from smartphone banks - although Revolut’s recent free app for kids is a nice perk.

Other 'offers' – such as rounding up your purchases to the nearest euro (at your expense) – smack of  old fashioned bank marketing gimmicks, of no financial benefit.

And while it’s nice to have free banking and currency exchange, these are two niche products.

Despite all the fuss about bank charges, they cost us around €70 a year at worst, while currency exchange is a once or twice-a-year deal for most people.

The impending arrival of a new player in the mortgage market – Avant Money – cutting interest rates below 2% is much more significant to consumers and rival banks.

That could save someone on the dearest mortgage €3500 a year – not just seventy quid.

The biggest question hanging over Revolut for me is can its already stretched customer services cope with the breakneck pace of growth?

Elsewhere on these pages, we tell the stories of some who ‘went through hell” when their accounts were frozen pending a banking investigation.

Most banks have to freeze accounts now and again to investigate suspected money laundering, among other things, when certain warning flags are raised, often for entirely innocent reasons. 

But banking sources tell me that it shouldn’t take more than a month to do so. 

Does it take Revolut this long because it employs so few people?

AIB took centuries to grow into Ireland’s biggest bank, with over 200 branches and almost ten thousand employees. 

It has around 1.34m active customers and 2m account holders in all.

That’s 200 customers on average for every employee, less if you exclude the inactive ones.

Revolut, apparently,  grabbed a million Irish customers in the comparative blink of an eye, with no branches and hardly any employees here. 

The company announced last year that it would take on an extra 3500 staff. 

But when we asked how may people it employs this week, we were told 2000 -  up 400 on 2019 despite skyrocketing customer numbers.

So a few hundred added employees (so far) are trying to cope with an extra 10 million customers.

And just 2,000 staff worldwide now service nearly 13 million people.

That’s a total of one for every 6500 customers – 32 times more than each AIB staff member has to deal with on average.

Can so few Revolut staff provide a satisfactory service to so many people?

The experience of some of our readers would suggest not. 

Is your money safe with Revolut? Any money we put in an Irish-regulated bank is protected by the Deposit Guarantee Scheme (DGS). This means that if a bank goes bust, you will get at least €100k of your money back. Revolut is not a bank and is not part of this scheme, although it makes a strong case that our money is also safe with it. “Licensed by the UK Financial Conduct Authority, Revolut is legally required to safeguard money it receives from customers,” a spokesperson said. “All customer funds…are placed on deposit in safeguarded accounts in top-tier global banks.” For Irish customers, these banks are Lloyds, Barclays or JP Morgan. That’s reassuring. But it will be a hard sell to persuade jumpy Irish depositors to stash significant sums outside the DGS which has achieved a hard-won level of trust and understanding among them.  The mere fact that Revolut is not covered by it merely reminds us that it is an outlier not regulated by the Irish Central Bank. It’s also telling that Revolut reassures us by piggybacking on the credibility of long-established banks where it ultimately puts our money!  Until Revolut grows up and becomes regulated like one itself, my Revolut account won’t contain much more than the €15 I popped in recently to test it out. How free  is free banking? Revolut isn’t the only outfit offering ‘free banking’ in Ireland. EBS, N26, KBC and the credit unions also have accounts that don’t charge for three main items – maintenance, ATM withdrawals and debit card transactions. The EBS Money Manager account seems the most “free’ with only a few understandable charges (for things like bounced cheques and unauthorised overdrafts). However, there is no authorised overdraft facility. The most significant ‘strings’ attached for the rest involve ATM transactions. Revolut’s are most restrictive. Your free withdrawals are capped at just €200 per month, after which a hefty 2% fee will apply to any money you take out. N26 and credit unions restrict free ATM withdrawals to 3-5 a month, which is a more reasonable limit. After that is exceeded, credit unions charge 50c per transaction and N26’s cost €2.