London risks losing fintech edge to NY, says Revolut boss

LONDON risks losing its supremacy in the fintech sector to New York, the UK chief executive of Revolut has warned.

Francesca Carlesi said the prospect of losing talent to the US was the “biggest threat” for Britain’s fintech sector, which has been hit by a drop-off in investment in recent years.

Speaking yesterday at London’s Innovate Finance Global Summit, Ms Carlesi said: “Right now there is a bit of a risk posed by New York. It’s not just about listing, it’s about talent.

“New York is probably the only other city in the world with the same concentration of human capital in financial services. So that’s where I see the biggest threat.”

Her comments came as a Revolut shareholder increased its stake in the business by 45pc, in a sign that investors are regaining confidence in fintech.

Schroders Capital Innovation Trust revealed in its 2023 annual report that it now values its stake in Revolut at £7.8m, up from £5.4m in 2022. The write-up implies Revolut has an overall valuation of roughly $25.7bn (£20.6bn), up from $17.7bn a year earlier.

That figure remains lower than Revolut’s $33bn valuation in 2021, which was achieved after it raised $800m from backers such as Softbank.

Although Revolut declined to comment on the valuation, the mark up does signal a turnaround in a sector hit by falling valuations in recent years.

In 2022, buy-now-pay-later business Klarna suffered an 85pc cut to its valuation from $45bn to $6.7bn. Stripe, the online payments company, also saw its valuation plunge to $50bn in 2023, down from $95bn two years earlier.

Venture capital investment into fintech fell by 42pc in 2023 to $35.5bn, according to analysis by S&P. This was down from a high of $91bn in 2021 and it led to start-ups conducting mass layoffs.

However, Schroders said it was “cautiously optimistic” about “improving market conditions” across its portfolio of high-growth investments, such as Revolut.

Schroders said Revolut had reported “solid progress” in 2023 and “continued its rapid international expansion”, with customer numbers increasing to 35m.

It said Revolut expected to achieve revenues of $2bn in 2023, up 80pc on the previous year.

‘New York is probably the only other world city with the same concentration of human capital’