What Revolut can and cannot take from South Africa’s banks

Revolut’s application for a South African banking licence is progressing, and the company is still targeting a 2028 launch. That is a long wait in a market that keeps moving. By 2028 the app-quality gap Revolut exploits elsewhere will have narrowed, the newer entrants will have dug in and reform of the National Payment System will have changed what a licence is worth.

The European model works like this: free accounts bring customers in, a share of them convert to paid subscriptions, and that revenue funds credit, savings and trading. It works where banking is fragmented, where foreign exchange fees are extractive and where money crosses borders with little friction. South Africa has the extractive fees. Its banking market is concentrated and its cross-border flows are controlled.

Exchange controls apply. An individual may move up to R2-million/year under the single discretionary allowance without tax clearance, and a further R10-million for foreign investment with it. Better design does not remove those ceilings. They cap the volume and the velocity that make the European model pay.

Revolut can still beat the banks on the experience of moving money, inside the same regulatory envelope, by partnering with an authorised dealer. The authorised dealer network is dominated by the large banks. How closely Revolut can reproduce what it does in Europe – live rates, transparent pricing, fast transfers – depends on what a partner will enable and at what price. Its biggest advantage would rest on commercial decisions taken by the institutions it is trying to take customers from.

Revolut’s target customer already banks with FNB, Standard Bank, Absa, Nedbank or Investec, and usually holds credit there, too – a home loan, vehicle finance, a business account – along with a rewards programme. A currency wallet is easy to add and easy to drop. A 20-year home loan is neither.

Discovery Bank is the closest competitor. Its paid subscription model, Vitality integration and actuarial hooks aim at the same high-income, internationally mobile customer, and it passed a million clients in August 2024, two years ahead of its own target. Price is not what holds those customers in place.

Concentration is high by any measure. World Bank figures put the three largest banks at about 79% of banking assets in 2021, and the Reserve Bank’s own risk assessment puts six large banks at roughly 93% of sector assets. The positions Revolut broke into in Europe looked nothing like this.

There is a version of this in which Revolut builds more than a second wallet. It turns on a decision the company has not made publicly.

In Europe, Revolut bundles a global eSim into its top tier as a retention perk for customers it already has. South Africa would need more: a local mobile proposition, through an MVNO or a wholesale deal, giving the customer a South African number they use every day. A traveller will carry a second Sim. Making it the everyday number means beating the inertia of an existing number, a configured handset and an existing mobile relationship.

The reasoning is that connectivity becomes an acquisition and engagement tool among customers banked elsewhere.