Revolut | Jan 31, 2025
Competition Heats Up As Revolut Launches Commercial Real Estate Lending Unit
As reported by PYMTS, Revolut has launched a new business unit focused on Commercial real estate lending Revolut, one of the largest fintechs globally, is moving into commercial real estate lending, a sector that is traditionally dominated by large banks and institutional investors. Reading between the lines, this move signals that large fintechs are on the move seeking new revenue opportunities, and entering one of the most capital intensive areas of finance. What are the implications?
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The entry of a large fintech player like Revolut could disrupt commercial real estate with a digital-first approach that integrates the latest artificial intelligence capabilities while fast tracking approvals and automating real-time underwriting. If successful, it will put pressure on incumbent lending institutions and give borrowers more choice and lower barriers. Revolut has appointed Duncan Batty from M&G Investments to lead the initiative.
Revolut has been aggressively expanding its product offerings recently and is also launching a private banking division for high net work individuals, along with applying for a banking license to become the first global digital bank in New Zealand.
Why This Affects the Fintech Industry
Until now most large fintech companies have largely focused on payments, consumer lending and wealth management services. By entering commercial real estate lending it’s a sign of maturing fintechs since that type of lending requires higher capital risks, more robust risk management, and with that comes stringent regulatory oversight. In the past, Revolut experienced regulatory growing pains taking several years to acquire a UK banking license, investigated by the FCA in 2023 for allowing withdrawls from suspicious accounts, and was urged by the European Central Bank to improve financial crime and governance controls.
See: Revolut’s Crowdfunding Success from Start-up to $45 Billion
If Revolut can improve the process and offer more competitive rates, it will force traditional lenders to rethink their business models as fintech competition could ramp up quickly.
Regulators may be more encouraged to allow Revolut to operate as a digital first global bank at scale. All told, if Revolut can make things work then other fintechs may likely follow by entering more capital intensive markets.
What About Canada?
Revolut entered Canada in 2019 with a beta version of its digital banking services but announced its exit in 2021 due to regulatory challenges that didn’t allow them to offer the full range of services they had planned. While Revolut kept the idea open to the possibility of returning to Canada, at the time of writing, they have not re-entered nor has there been any progress of a (digital) Canadian banking license application.
Despite its exit, Revolut left open the possibility of returning to Canada in the future. As of today, it has not reapplied for a banking license or re-entered the market, leaving Canadian fintechs to fill the gap in digital banking and alternative financial services.
See: Wealth Management Insights for Fintechs and Investors
Having said that, Canada’s fintech ecosystem does have various participants making strides in fintech real estate lending. Companies like Lendwire, Nesto, and Pine are already offering digital lending solutions.
Closing Thought
Canada’s regulatory and ologopolistic banking environment are key barriers to faster fintech growth in this sector which can slow innovation. However it begs the question, if Revolut is able to develop a successful real estate lending model abroad, will Canadian fintechs push for regulatory changes that allow them to compete more effectively at home before global fintechs consider/re-consider entering the market?
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada’s Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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- Source: https://ncfacanada.org/revolut-pushes-into-commercial-real-estate-lending/