I feel invested at this point, like I've watched a movie that just cut off in the middle...
Unbelievable. It’s impossible for people in this caste to fail.
In an unrelated matter, experts are baffled at the ongoing weakness in the banking sector.
“There is not any doubt over the completeness of the balance sheet, which, in turn, logically means that total revenue is also correct,” he[0] said.
As described in the basis for qualified opinion section of our report, we were unable to satisfy ourselves concerning the completeness and occurrence of certain revenues for the year ended 31 December 2021. We have concluded that where the other information refers to revenue or related balances these may be materially misstated for the same reason.
[0] Salovaara, the CFO.
[1] https://assets.revolut.com/pdf/Revolut_Ltd_YE_2021_Annual%20... which is linked on https://www.revolut.com/financial-statements/
1. The part I quoted suggest that any statement by management about revenue-related balances may be unreliable.
2. The 'Basis for qualified opinion', which does refer to the financial statements is clear that they were unable to verify almost 500MM GBP of revenue.
... we were unable to satisfy ourselves by the execution of such procedures or by alternative means concerning the completeness and occurrence of revenue within these streams totalling £476,856k which is included in the Statement of Comprehensive Income and Note 6 of the financial statements for the year ended 31 December 2021. Consequently, we were unable to determine whether anyRegarding #2, if these numbers turn out to be incorrect, then it's extremely unlikely that the income statement could be adjusted without the balance sheet also being adjusted. The income statement reflects changes in the balance sheet over time. If the changes turn out to be wrong, then there are three possibilities:
A) The most recent balance sheet is wrong.
B) The previous balance sheet was wrong.
C) Both (A) and (B).
Why does it specifically have to be an UK banking license?
Also in 2008, the UK had an issue where 350k residents had deposits at Icesave, a savings account offered by Landsbanki in Iceland, that went bust. The bank wasn't registered in the UK, and the government of Iceland refused to provide compensation for those that lost their deposits. They probably want to avoid a repeat of that.
So yeah, I think a lot of fintech is not particularly good, but I don't think we can generalize to the level of the crypto boom.
I really don’t understand why so many people in the UK use it as the deposits are not FSCS protected so if something goes wrong you’re fuck out of luck.
I had to warn a friend of mine who kept 5-digit savings in there. He didn't know about the lack of banking license (and this was even before they got the Lithuanian one) and was pretty shocked.
I wonder if this is the kind of lesson that needs to be re-learned every few generations?
Back to Revolut - I'm of two minds about bank apps. On the one hand, good apps are good, and some things really get streamlined this way. On the other hand, this only sets us up for another battle in the war on general-purpose computing: a fight over mobile device ownership.
Banks didn't just improve the UX of their apps. Some made them the primary or sole remote interface to one's accounts. Many (most?) are now using apps for 2FA, and heavily pushing it - with such banks, using the web interface from a PC browser still requires confirming any meaningful operation via the smartphone app.
The problem here is, banks are one of the most eager users of remote device attestation features, and (by being big and full of money) they have all the leverage over users and smartphone vendors alike. Many bank apps will refuse to run if they detect the phone isn't pristine and fully locked down by the vendor - and with modern phones now coming with built-in APIs for such checks, rooting the phone or flashing it with custom firmware is quickly losing all value. After all, what good is a rooted phone if you can't use it for anything important that smartphones now do?
They don't care about security other than for avoiding devices that gives user a control over what data is accessible.
Security in banks is generally very basic (anyway, everything is covered with insurance, which is paid by the users, in the end).
User data is used mainly to calculate credit rating and for upselling.
I hate the Revolut app. It's busy messy and half of it is ads for their premium and affiliate products.
> Mikko Salovaara, its chief financial officer, told the Guardian in an interview that the company was on the brink of getting a banking licence from City regulators: “I think we’re at the very last stages. Really at the finish line.” Salovaara said the UK licence was a step towards achieving Revolut’s aim of becoming a “truly global bank”. It would allow the company to offer “an increasing set of services to our customers, particularly credit.”
Sounds like another Wirecard. There's even the cliched startup quote "we want to be the Amazon of banking". WC wanted to be the Paypal of Europe. Amazing how far you can get before you've earned a single cent of profit!
[0] https://www.theguardian.com/business/2023/mar/01/uk-fintech-...
The CFO of all people should have advised withdrawal of their application until internal controls were sorted. That they're resigning instead doesn't bode well.
From the FT, their UK operations chief departed as well: https://www.ft.com/content/f27f6b80-d32d-4913-991d-c512f6e90...
The stuff with the accounts already existed, apparently the regulators found these issues when examining their suitability for the licence (I have read from sources online that there is a very significant issue with revenue recognition, as in a percentage of revenue significantly above 50% couldn't be matched in their systems), but the resignations came after they went to the media and tried to bounce the BoE into giving them a licence (spoiler: what the CFO is quoted as saying it is total bollocks, they aren't close to getting a licence).
The media furore in the UK from execs about insufficient levels of executive pay unfortunately has created the space for opportunism like this.
Wow...I'm a bit surprised. We've had a pending application for VAT registration in the UK since sometime in the 1st quarter of 2019. I had assumed that if a government is so short of resources that they can't manage to process applications to collect taxes for them, they would probably also be very slow on applications for financial things that don't directly give them money.
Every time we ask about our VAT application, they just say it is still processing. They told us to collect VAT, but to call it something else like "additional fee", and hold it until they get around to processing the application.
But again, all of what you said indicates that Revolut has fucked up. But it doesn’t mean they are doing WireCard levels of fraud, or any fraud at all.
But it is like a smoke alarm going off. It doesn’t mean there is a fire but there could be.
This company is so big that it should have a mature infrastructure for this type of thing. It is quite strange and thus suspicious that it is running its business is a haphazard way that it can not be effectively audited.
Let's just remember that most bureaucracy exists so that only those who persevere can make it to the other side. And even then if you bother the wrong people there's more bureaucracy to harass you with.
Financial oversight groups should start an investigation but it probably shouldn’t be called criminal at this point. Just an oversight issue where they demand more info.
But imagine if a person cannot explain to tax agency some large sums of money flows.
it will blow up like this in very different places, wiping those who lived by the grace of free money