Getting wise with the world’s financial data

Getting with the Wise world’s financial data

It’s been a landmark year for cross-border payments giant Wise, following a decade of impressive growth. We sat down with Matt Briers, Chief Financial Officer, to discuss the company’s evolution, its recent listing, and what’s coming next

Like many of the world’s most disruptive companies, cross-border payments specialist Wise was born out of frustration with the status quo.

Back in 2010, Estonian friends Kristo Käärmann and Taavet Hinrikus shared a common problem. Hinrikus, who was the first employee at Skype, lived in London but got paid in euros. Käärmann worked for Deloitte, also lived in London, and got paid in pounds. But he had a mortgage in euros back in Estonia.

They both moved their money around via their banks, which had expensive fees and bad exchange rates. They knew there had to be a better way. So they put their heads together and worked out a new way raised over $1billion in primary and secondary transactions from some of the world’s leading investors. Currently, some 11 million people and businesses use its services. The Wise account enables users to transfer money internationally at a cheaper rate and allows the to hold money in more than 50 currencies and get real bank details in 10 currencies.

“Today, we move more than £6billion a month,” says Matt Briers, CFO. “We move 40 per cent of that instantly, so it’s available in people’s accounts within 20 seconds, which is quite mind-blowing, and we’re typically the cheapest by quite a stretch, charging around eight-times less than a typical bank.”

to make cross-border transactions at the real exchange rate. They would informally transfer money between one another, by looking at the mid-market rate of a certain day each month. This allowed them to achieve a fair exchange rate without paying additional bank charges.

RAPID RISE TO UNICORN

Following this discovery, the pair launched Wise in 2011 under its original name TransferWise. The company has gone on to enjoy a stellar rise, achieving unicorn status and launching an incredibly successful public listing earlier this year.

Wise is now one of the world’s fastest-growing tech companies, having

Eyes-on cross-border:

Wise is reaping its rewards for taking the pain out of international payments

Earlier this year, Wise introduced its multi-currency investment feature Assets to UK customers, giving individuals and businesses in the UK the opportunity to choose how their money is held, and potentially earn a return on it, across 50-plus currencies. It chose the first asset to be Stocks, a broad portfolio of 1,557 of the world’s largest public companies included in the MSCI World Equity index, such as Apple, Amazon, and Google, which is collectively worth more than £40trillion. BlackRock provides the tracking fund for the index.

Wise is highly-regarded by its industry peers and commentators alike, thanks to a decade spent building a strong culture of innovation and developing some very talented people. Its ex-employees often go on to create their own companies, with the pan-European investment app Lightyear just one example. It’s something of a trend, with Sifted recently referring to the ‘TransferWise Mafia’.

Most significantly for Wise’s prospects, according to a recent McKinsey & Company report, cross-border payments remain a significant growth area. In 2020, for example, even with travel and trade volumes in decline, cross-border e-commerce transactions grew 17 per cent. Cross-border network provider SWIFT’s volumes were 10 per cent higher in December 2020 than December 2019.

Not only has a widely-anticipated ‘re-shoring’ of production chains and related shift in trade flows so far failed to materialise, but increases in non-trade payment flows have more than offset lower transaction volumes in trade, driven by increased volatility in treasury, foreign exchange and securities. And such dynamics are leading to volume growth and record market valuations for payments specialists like Currencycloud (recently acquired by Visa), Banking Circle, and Wise.

A YEAR TO CELEBRATE

A year of significant developments for Wise began in January 2021, when it announced a global partnership with Visa to leverage Visa Cloud Connect. This has enabled Wise to further expand its footprint, rolling out its multi-currency debit cards in Asia Pacific, Europe, Latin America and the Caribbean, the Middle East, UK and US.

Expanding into new markets would have previously required significant investment in local data centres, telecommunications It democratises things and lets our infrastructure and specialised payment customers invest in our future,” says Briers. hardware. But with Visa Cloud Connect, “Becoming a public company isn’t easy, Wise can quickly establish a secure and it shouldn’t be because the thresholds connection to VisaNet through its Cloud and standards that are put on public provider, eliminating the need for costly companies should be high. So, we had a local connectivity and speeding up Wise’s lot of work to do. In fact, it was months of ambitious expansion plans. work for a lot of people across the company

In February, Wise officially adopted its to help us get to that moment in July.” new name, explaining that this reflects what it is building for – a community of BUILDING ON SMARTER people and businesses with multi-currency FOUNDATIONS lives, which includes banks themselves. Following Wise’s explosion across the

“When I first joined, we had four or five world’s markets, much of its success lies in people in finance, and most of our financial its ability to manage its plethora of data data was held on a spreadsheet,” explains efficiently, streamlining it to ensure a Briers. “Now, we have billions of rows of smooth operation that helps it move fast. data and it’s all controlled in a way that “There are very few global banks in helps us understand exactly where the world,” explains Briers. “Some call anyone’s money is, at any point in time. themselves global, but they’re not really;

“We’ve now got a team of 100 people in they’ve expanded into other markets finance, but we also pull on engineers in by buying other banks. If you look under teams across the whole business. You need the hood, they have multiple businesses, people who are really driven and dedicated typically on different accounting systems to building something amazing. Some and ledgers, hindering their ability to of the great banks around the world are operate internationally. starting to integrate Wise as well; we’re “So, many of these ‘global’ banks are being plugged in to help run their currency actually just a brand, wrapped around a transfer operations.” lot of local banks and different systems

With its bullish new identity, in May 2021 that don’t interact well. What we’ve built, Wise tapped into an additional £160million at Wise, is one ledger everywhere, so capital facility to refinance existing debt and we’ve got one system that understands support its funds flow and ongoing working where anyone’s money is, anywhere in capital needs. Just two months later, it made the world, at any point, and we can move global headlines when it that money really quickly. took part in the first-ever We’re not It sounds simple, but it’s direct listing of a tech going to actually very hard, and really company on the London Stock Exchange, with the the moon yet, hard for others to replicate when they’re rooted in company valued at a market but I won’t multiple local infrastructures. capitalisation of £8billion. rule it out! It also means our data is all in

A direct listing doesn’t one place, and our analytics involve raising new capital or bringing are phenomenal. We can understand our in new investors as with a formal initial exact financial position within minutes, public offering. The price was determined and how much money we’re making.” through an extended three-hour opening After a blockbuster year, the logical auction, rather than through a traditional question is what’s coming next? book-building process in which a “We’re building an aspirational product,” company’s bankers ask institutional says Briers. ”Whether you want to manage investors, in the days running up to the your money better, or your international IPO, to submit bids for shares and the banking, then Wise is a cool place to do price they’re willing to pay. that, and it will get increasingly better in

“It means that, instead of just institutions every jurisdiction. Will there be new being able to invest, anyone who has features? Yes, definitely. But built in a way access to the London Stock Exchange – and that just helps people manage their money now also the New York Stock Exchange around the world, in an easier and wiser because we’ve got an American Depositary way. So, no big diversions. We’re not going Receipt (ADR) listed in New York, too – can. to the moon yet… but I won’t rule it out!”