UK-based neobank Revolut has come under fire for its handling of fraud cases and security protocols. A recent investigation by BBC Panorama has shed light on several issues plaguing the rapidly growing fintech firm.
Fraud Incidents and Customer Losses
A businessman reported losing £165,000 from his Revolut business account due to fraud. He claims that the company’s security measures were inadequate to prevent the theft, with criminals allegedly bypassing the identity verification system.
Fraud Reports and Comparisons
According to data obtained by BBC Panorama:
- Revolut was mentioned in nearly 10,000 fraud reports to Action Fraud last year
- This figure exceeds that of Barclays by 2,000 reports
- It is double the number reported for Monzo, a similar competitor
Corporate Culture and Priorities
Former employees interviewed by Panorama raised concerns about:
- An intense focus on growth
- A high-pressure work environment
- Financial crime prevention taking a backseat to product launches and customer acquisition1
Regulatory Landscape
Recent developments in the regulatory environment include:
- New regulations requiring banks and electronic money institutions to reimburse fraud victims
- Revolut receiving a banking license in July, paving the way for full bank status
- Increased scrutiny on Revolut’s practices as it transitions to a fully licensed bank
Revolut’s Response
Revolut has stated that it:
- Takes fraud seriously
- Has implemented ‘robust controls’ to meet legal and regulatory obligations
- Has invested heavily in its financial crime prevention team
- Reduced fraud by 20% last year
Industry Implications
As Revolut moves towards full banking status, the financial industry should closely monitor:
- The company’s ability to handle increased regulatory requirements
- Its approach to customer protection and fraud prevention
- The potential impact on traditional banking institutions
Compliance professionals should remain vigilant and consider the lessons from Revolut’s challenges when developing and implementing security measures and fraud prevention strategies.