Financial technology exec hypes consumer-centric approach

Alan Chang, chief revenue officer of Revolut, a British financial technology company, touted a customer-centric focus and a “faster, cheaper, better” mantra as keys to the company’s emerging success as a neobank operating exclusively on the internet.

For the Knight Venture Leader Series virtual talk on Feb. 15, Chang engaged in a Q&A with John Quelch, dean of the University of Miami Patti and Allan Herbert Business School, and Robert Gregory, an associate professor of business technology who joined the school recently.

“Everything is about product,” Chang said. “Customers come first, and then we figure out the business side, revenue, and cost later. Innovation is our business model.”

The model includes growing a huge global customer base and then offering an unlimited array of services at lower prices, possible because of the high volume of cliental, Chang explained.

He cited the company’s initial service offering—a digital platform to exchange and transfer global currencies without the traditionally high surcharges charged by intermediaries—as an example.

“It’s so easy. You type in the amount you want to exchange, and it’s done in real time,” he said. “It’s as easy as boarding Uber, as easy as any consumer should expect—it’s faster, cheaper, better.”

Revolut launched in 2015 and now provides services that range from credit cards to personal loans to hotel stays to 18 million customers and 500,000 businesses in 38 countries, according to Chang. He said there were no limits to the company’s potential to expand.

Quelch questioned the sustainability of this cross-selling approach and profitability for potential shareholders.

“We can afford to make every product 10 times cheaper. And, mathematically, as long as you sell 10 or more you can make the same profit margin,” Chang noted. “Because of the discount you will attract more customers, and the profit margin per customer can remain the same. And because we do it cheaper and better, we attract more customers.”

Gregory asked why startups appear to have an advantage over incumbent firms, especially in the rapid-paced global economy.

“It’s all about the people, whatever business you’re in,” Chang answered. “We’re able to attract the smartest, most ambitious people because these are the ones who want more responsibility and want to make the biggest impact,” he added. “Working in a small firm or startup you get much more chance to make an impact and to take on more responsibility.”

While he never earned an MBA, Chang said he always wanted to get into business and that he uses the “first principles” approach—breaking down complicated problems into basics and then reassembling them from the ground up—learned when he was studying physics as the basis for his expertise.

Chang pointed out that universities have an important role to play in advancing entrepreneurship.

“Entrepreneurship cannot be forced, but it can be fostered by showing it as a possible path,” he said. “In my education, there was no encouragement to pursue entrepreneurship. There’s nothing wrong with following a traditional path into business or another field, but universities can do a better job of showing startups as a possible route or career path.”

The business executive said his company was delving into cryptocurrency and that there was a “load of opportunity” there, though, for now, the system is complicated and cumbersome.

“Right now, it’s a pain, an absolute pain. You have to go through so many steps and pay a lot of fees—worse than in traditional finance,” said Chang, adding “though once you get in there, it’s actually pretty good.”

Gregory questioned if the crypto market system would benefit from a back-end revolution, suggesting that Revolut might provide some remedy.

“That’s how we see it,” Chang said. “In crypto the application of the infrastructure is not very good. For sure, we see a similar opportunity in crypto just as we saw in traditional finance.”