In another sign that the biggest of the new breed of online-only fintech banks are starting to break through as serious challengers to established banks and retail-facing financial services companies, Revolut is reportedly targeting Michael Sherwood for a position on its board. Mr Sherwood formerly headed up the European operation of U.S. banking giant Goldman Sachs and at one point was even tipped to take over the top job on Wall Street. Sky News reported over the weekend that he is expected to be appointed to a role of non-executive director on Revolut’s board, with an official announcement expected some time this week.
Mr Sherwood, originally a bond trader, spent 30 years at Goldman Sachs before leaving in 2016. When he departed his star had fallen from the heights it had reached when he was thought to be under consideration as the group’s new chief executive. The same ‘buccaneering approach’ to banking that Sherwood had built his career on eventually got him, and Goldman Sach’s European division into trouble.
The bank, under Mr Sherwood’s leadership, played a role in helping Greece conceal the true extent of its debts in order to meet Eurozone rules for its 2001 adoption of the euro. Other controversies under his watch included Goldman Sachs cultivating close ties with former Libyan dictator Colonel Gadaffi and his Libyan Investment Authority state fund. He is also said to have ‘informally advised’ troubled British retail tycoon Sir Philip Green to sell BHS for £1 in 2015. The buyer was Dominic Chappell, a businessman with a series of bankruptcies behind him and 13 months later BHS went into administration at the cost of 11,000 jobs. Green has subsequently stated that he only agreed to do the deal with Chappell because he had been ‘vetted’ by Goldman Sachs.
Nonetheless, attracting as high profile an establishment banker as Mr Sherwood to its board would be considered something of a coup for Revolut. His willingness to ‘bend’ the rules could also be said to be in-keeping with Revolut’s own reputation for not being opposed to guerrilla tactics in its pursuit of growth.
The fintech has been accused of prioritising growth ahead of meeting regulatory requirements. Mistakes in an upgrade to its customer vetting system has led to suspicions that the platform, which offers low-cost currency exchange and international transfers as well as current accounts, may have been exploited for money laundering. Links to the Kremlin have also had to be denied in the past.
But despite occasionally troublesome PR, Revolut has doubled the number of users of one or more of its financial services to 5 million since June last year. Its stated aim is to disrupt financial services in way comparable to how Amazon has disrupted retail and the start-up has managed to raise around $336 million from investors. It was last valued at $1.7 billion despite its most recent annual results showing a £15.1 million ($19 million) loss over 2017.
However, Revolut’s management has stated that it currently has no ambition to move into profitability in the foreseeable future with the priority currently on international expansion. Revolut’s business model is use technology to bring as many of its systems as possible in-house, allowing it to be profitable despite significantly undercutting fees charged by traditional banks for many core financial services. Cross-selling other, more profitable, financial services such as overdrafts, consumer loans, insurance and eventually mortgages is also a key pillar of Revolut’s long-term business model.