Revolut and Cross River team up to offer consumer loans in the US

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Diving Brief:

  • Neobank Revolut partners with Cross River Bank to offer personal loans to its US consumers, the two companies announced on Thursday.
  • The London-based fintech, which has previously partnered with New York-based Metropolitan Commercial Bank to offer digital banking services in the United States, said it was leveraging Cross’s technology and regulatory expertise. River to scale and grow in verticals, including credit.
  • Revolut said customers using the personal loan offer, which will be available to its US customers in the coming months, will not be subject to late fees, origination fees or prepayment penalties.

Overview of the dive:

Since entering the North American market in 2020Revolut is trying to establish its presence in a digital banking landscape dominated by US-based players such as Varo and Chime.

Revolut’s upcoming consumer loan product offering will help it stand out from other competitors in the space, the company said.

“We are trying to create a super financial app that can meet all the financial needs of the customer. That is the genesis of this product,” said Tarun Bhushan, Head of US Loans at Revolut.

The personal loan product will feature same-day loan funding, the company said. Customers can also set up automatic payments for loans.

“[O]Once the loan is approved, it can land in the user’s Revolut wallet account within minutes,” the company said in a press release.

Revolut said it informs customers by email if they have been shortlisted for the personal loan offer.

The neobank plans to offer loans ranging from $1,000 to $30,000. This range, however, is subject to revision as the company collects more credit data ahead of launch, Bhushan said.

“We’ve done a lot of analysis using the credit bureau datasets to make sure we’re also offering very competitive interest rates,” Bhushan said.

The neobank offers its personal loan product to customers based in Poland, Lithuania and Ireland, Bhushan said.

The start of the COVID-19 pandemic impacted at Revolut entry into the United States in early 2020; the neobank launched without the fanfare it had shown in other markets, former Revolut USA CEO Ron Oliveira said Banking Dive last year.

“We knew what we had to offer resonated, even in the time of COVID, which is why we went for it. However, there was no reason, in our view, to advertise and push the product further than that, because of what was going to happen with traveling, with people in the office or out of the office, all of those things,” said Oliveira, who left fintech in January to become the CEO of Moonstone Bank, based in Bellevue, Wash., according to its LinkedIn profile.

To gain an edge in the competitive US market, Revolut has also taken the bank charter route.

The company submitted a draft applicationn with the Federal Deposit Insurance Corp. (FDIC) and the California Department of Financial Protection and Innovation in March 2021 to obtain a banking license in the United States

The neobank has also launched a small business banking product in the United States last year and plans to offer loans to its small business customers, Bhushan said.

“We don’t want to build products to cater to just one small segment in a country. We’re building a great global financial app,” Bhushan mentioned. “You will see many more products over the next few months or years. We will continue to offer more and more options to our consumers to meet all of their financial needs.”

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