Revolut Bank CIO invests in change

Mark Chillingworth Profile picture for user Mark Chillingworth April 3, 2024
CIO Felipe Peñacoba leads change at Revolut - and has had to change himself - as banking’s challenger rethinks how customers manage their money

An image of the Revolut Bank app
(Image sourced via Revolut Bank)

For 26 years, CIO Felipe Peñacoba has been modernizing banks. Transforming banking is not easy, and as the CIO for Revolut Bank Europe explains, change is hard for banks and for CIOs - but is also eminently possible.  

Peñacoba had spent the bulk of his digital leadership career in financial services. As an Accenture consultant from 1997 to 2008, he worked with BBVA, Santander and CAM (now part of Banco Sabadell), the leaders of his native Spain’s banking sector. Working with Santander as a consultant led to an opportunity to jump ship and join financial services completely, and in 2008, he joined Santander to work on technology integration. Cast your mind back to the first decade of this century, and Santander was one of the most acquisitive banks on the global market. That buying spree led to Peñacoba moving to the UK in 2008 to lead the integration of Santander’s acquisitions, as three British building societies had been bought (Abbey National, Alliance & Leicester and Bradford & Bingley). He says:

That was a great time. It was very clear what the mission was, why we had to do it, the value that the integration would achieve. And it led to technology that was more efficient and consistent. It is hard work doing those transformations, but the rewards were huge.

We saved money, we gained velocity and agility, and it was easier for us to adjust to market trends and customer needs. 

Integrating these banks was about more than making an acquisition stick; for Peñacoba and the technologists, it was about rationalizing Cobol mainframes from IBM that were operating proprietary core banking systems that relied on large overnight batch processing. As is now well understood, making changes to these systems was high risk and only took place occasionally. 
The acquisitions had to deliver significant efficiencies in the bank’s business processes, as well as rationalizing the technology estate to be more efficient. 

Joining the Revolut(ion) 

That pace of change and new ways of working gave Peñacoba a taste of how different banking could be. Having become UK CIO for Santander Retail & Business Banking in 2016, he moved into the first of two challengers to established banks in 2019, firstly spending two years with London headquartered Finastra and now Revolut. He says of Revolut, where he’s been CIO for Europe since June 2021: 

It wants to be disruptive, and it is disruptive by design. We challenge the status quo, and we even challenge the rules as we want to change them to make banking better.

I was brought in to build the structure for the bank in Europe, as they were growing fast and they needed someone experienced in banking. Since joining, we have built a team and structure to suit and enable the growth over the next five to 10 years.

In 2015, London was buzzing with excitement about how new banks and business models would challenge financial services firms with over a hundred years of heritage. The European capital was set to be the home of both the established order and the start-ups rethinking banking. Thus, Revolut was born in 2015 in the then very trendy Level 39 incubator that CIOs such as Paul Coby, then CIO with retailer John Lewis, backed. 

Revolut founders Nikolay Storonsky and Vlad Yantsenko began as a multi-currency card and payments app. The bank’s short history is closer to that of a Fintech start-up than a bank, in that venture capital funding has been central to its growth; by 2018, it had raised $250 million in a Series C round. 2018 would also be the year Revolut really took a major step into banking, securing a challenger bank license in the European Union, via the Bank of Lithuania. 

Deals with Visa in 2019 led to credit card services alongside stock trading on the New York Stock Exchange and Nasdaq, as well as entry into 24 new markets. A year later, a further funding round led to Revolut becoming the UK’s most valuable financial services start-up, and despite the pandemic, Revolut opened in Japan and the USA. It would also become profitable by November 2020. 

Subsequent funding rounds from the likes of SoftBank raised $800 million and enabled launches in all 30 European Economic Area countries, though a banking license for the UK, where it remains headquartered, has not been secured. The CIO says of Revolut today: 

You can buy travel insurance, exchange your money into most currencies, book accommodation and carry out crypto investments, all in one app. When you look at Europe, there is not any other app-based institution that can do as much as we can.

In Asia, the concept of the SuperApp that allows users to effectively carry out every form of transaction from a single App, from shopping, travel, media, entertainment, banking, insurance, dating, and much more, is common. Europe and the US have yet to develop a SuperApp culture, but Revolut is close in terms of being a single place for all types of financial services from one app.

Learning to change

Although Peñacoba was hired to bring his considerable experience to Revolut, he had to blend that experience with working in the ways of a venture-backed start-up bank, which attracted him. But it was a steep learning curve, he says: 

At the beginning, it was very demanding and intense. With the focus on actions and ‘let’s get things done, which is one of our business values. So I had to adapt, but I was convinced this was the way it had to be. 

I also had to learn not to be perfect. If you wait for it to be perfect, it is too late, as someone else will have done it already. Especially in this market.

Peñacoba says organizations like Revolut depend on, and benefit from, assessing technology change according to whether the change fits the concept of a two-way door. If a decision can be reversed and you go back through the door, then the product does not need to be 100% perfect. In addition, the bank has a group of vetted and trusted customers that will help with the testing of new developments. 

The role of the CIO is also different as a result of this approach, he explains: 

We have general managers that are end-to-end responsible for our product lines, and those managers have their own developers, UX and data science teams. This means that most of the technologists at Revolut are not part of the technology department; they are part of the product areas.

Product-based teams that include technologists working with product owners, UX designers and business line operations are becoming popular, but as Peñacoba says, in traditional banks, a new way of working and new types of teams are hard to embed with people who have worked a certain way for 30 years. So, what is the role of the CIO? 

It is not traditional. Revolut needs to make sure that we have the right governance, guide rails and design principles in place, especially in the core architecture that supports every product line. So there is a lot of managing by influence. I am convinced this is a much better way of getting things done.

Some might see it as a decrease in the role of the CIO, but arguably, it puts the role of the CIO much closer to that of the COO or how an architect directs the construction of a major building. Both act as guardians and the senior responsible person for the most important things in an organization. Peñacoba adds more detail: 

Revolut has one single instance of the app. Any product that comes into the app brings additional complexity and risk. So we have to protect that and collaborate to follow the guidelines. So it is a fine balance of being super efficient and consistent, but also secure with end-to-end control.

Peñacoba says this creates the right culture in the bank, as everybody is responsible for the creation of the product. Revolut employs over 9,000; about 2,000 are technologists, and less than half of those technologists work for the technology department. He says: 

I spend a lot of time with the product teams and their products to see what they are planning, prioritizing change management and understanding the risks and dependencies.

Revolut releases new code every week and continues to grow. In 2022, the bank recorded revenues of $1.1 billion, an increase of 45% on the previous year, and in 2023, a major hiring spree doubled the workforce. Peñacoba darted off to a recruitment interview straight after our interview in London’s Docklands. He says: 

We are investing in skills for resiliency, information security, developers, data science, data governance and everything you need to support this continuous growth.

As a European bank, it is not only reliant on skills in London. Peñacoba says he has watched the rise of his native Spain as a technology hub

Barcelona and other cities on the coast like Valencia, Malaga or Alicante are very attractive to live in. The good weather and cost of living make Spain very attractive. Revolut has hired in more than 40 different countries, and less than 20% of our people are in the UK. We are growing in Portugal and India too. We have a hub in Porto, and we have people who moved there for the good living conditions.

My take

I wonder if many CIOs and digital leaders would be comfortable with a set-up like Revolut, where the bulk of technologists are working for other leaders? But architects don’t erect buildings, they direct and ensure the blueprinted guidelines are kept to. Perhaps Revolut is revolutionizing how enterprise technology is delivered. 

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