What's happened
Revolut's innovative Karma system, introduced in 2020, incentivizes departments to adhere to risk and compliance protocols, impacting bonus calculations. The fintech reported a 148% profit increase in 2024, attributed to improved governance and customer growth. The system aims to foster a collective responsibility for compliance across the organization.
What's behind the headline?
Overview of Karma System
- The Karma system scores departments based on compliance with risk protocols, promoting collective accountability.
- Bonuses are adjusted using a multiplier based on team performance, rather than individual metrics.
Impact on Company Culture
- Since its launch, company-wide compliance performance has improved by 25%, indicating a positive shift in workplace culture.
- The system serves as a feedback loop, rewarding good practices and correcting non-compliance behaviors.
Financial Implications
- Revolut's profits surged to £1.1 billion in 2024, driven by increased subscriptions and revenue from wealth and cryptocurrency trading.
- The Karma system is part of a broader strategy to enhance governance and prepare for a public listing, following past regulatory challenges.
Future Outlook
- As Revolut continues to expand its services, maintaining a strong compliance culture will be crucial for sustaining growth and securing investor confidence.
What the papers say
According to The Independent, Revolut's Karma system is designed to enhance risk management by allowing departments to gain or lose points based on compliance actions. The spokesperson emphasized that the system promotes a culture of shared responsibility rather than tracking individual performance. Business Insider UK highlighted that the Karma system has led to a 25% improvement in compliance since its inception, with real-time dashboards tracking department performance. The Guardian noted that the system is part of Revolut's efforts to improve its reputation after facing regulatory scrutiny, with the company reporting a significant profit increase attributed to better governance practices. Each source underscores the importance of the Karma system in shaping Revolut's operational and financial success.
How we got here
Revolut, a leading fintech firm, has faced scrutiny over compliance issues in the past. To address these concerns, it launched the Karma system to enhance risk management and compliance culture, coinciding with its recent financial success and pursuit of a full UK banking license.
Go deeper
- How does the Karma system work?
- What are the benefits of the Karma system?
- How has Revolut's compliance improved?
Common question
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What is Revolut's Karma System and How Does It Work?
Revolut's Karma system is a groundbreaking approach to compliance and risk management in the fintech sector. Launched in 2020, this innovative system incentivizes departments to adhere to compliance protocols, significantly impacting the company's financial performance. As we explore the details of the Karma system, you may wonder how it compares to compliance practices in other fintech companies and what implications it has for the industry as a whole.
More on these topics
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The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom or Britain, is a sovereign country located off the northwestern coast of the European mainland.
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Revolut is a financial technology company that offers banking services. Headquartered in London, England, it was founded in 2015 by Nikolay Storonsky and Vlad Yatsenko.