New institutional investors are providing liquidity to longstanding Revolut employees and giving a valuation proof point to its stunning revenue and profit growth.

Revolut is strongly profitable while growing fast, diversifying revenues and finally being admitted to the banking club. Watch out.

With venture capital flooding in, the world’s biggest neobanks are more confident than ever. They still face serious questions about their long-term profitability and regulators are certainly paying them more attention, but amid the upheaval of Covid-19, freedom from legacy infrastructure has proved even more important than ever. The incumbents are rightly worried.

The $33 billion valuation in neobank Revolut’s latest funding round puts it in the same league as lenders with trillions of assets and billions in profit.

A bank with a profitable core business is a better bet than one designed to lose money.

A shift away from cash due to the Covid-19 lockdowns should be a godsend for firms such as Revolut, N26, Monzo and Starling. But venture capital funds were already getting fed up with neobanks’ growth-first strategies before the coronavirus caused a slump in core payments revenues. Those with weaker equity backing may struggle to survive.

For a sector reeling from money laundering scandals, it’s tempting to imagine that technology could be a low-cost way of solving such problems. AI could be a game changer for detecting low-level crime, but corporate-scale laundromats will remain tough to crack.