Great. Afternoon, everyone. We'll carry on to the second last session. We are delighted to welcome Wise to join us virtually for the session on Beyond Cross-Border Payments. Representing the company is Nilan Peiris, who's the Chief Product Officer. Before we get into the conversation, I just need to remind you that this conversation is not intended for the media and is off the record. Hi, Nilan. How are you? Can you hear us?
I can hear you. I can't see you, though.
Okay. I think that'll get sorted. Maybe to kick off, tell us a bit about yourself, your role at Wise, and then for those in the audience who kind of maybe are not fully familiar with Wise, a quick overview of Wise and the business model, please.
Sure thing, well. My name is Nilan Peiris. I'm the Chief Product Officer at Wise. I've been here for nine years and look after the product, sales, design, and analytics team here at Wise. Wise is a cross-border money transfer business, moving at the moment around about GBP 9 billion a month. Growing still strongly, between 30%-50% year-on-year. We have three core products. Our Money transfer product, a multi-currency account, and an enterprise product called Wise Platform.
Great. Maybe, you know, I think one of the kind of unique aspects of Wise has been the mission statement, right? To essentially drive down the cost of kind of cross-border payments. Can you tell us a bit about this and, you know, what's kind of the secret sauce and, you know, as you're kind of capturing share, who are you gaining that share from?
Wise's mission is to make the world's money moves instantly, conveniently, at a very, very low cost. That mission comes from talking to consumers and businesses and understanding the problems inherent in cross-border money movement, which is, it is slow today, it is expensive, and it is hard to do. Wise, we're set up to eradicate those problems completely. In doing so, we hope to build a huge business globally. In terms of market, we're looking at about a $2 trillion market on the personal side, and it's about $9 trillion on the SB side.
Okay. I mean, I wanted to maybe take a step back and understand the tech on the platform, because I think that's quite an important differentiator for you. Maybe tell us a bit about kind of how you built the platform. You clearly have a lot of scalability potential in it, and it's all kind of been largely organically driven, how this differs versus perhaps banks or some of the other digital competitors out there.
Great question. Well, I'm still missing the camera feed, but I'll keep going. From a tech perspective, banks, some banks, major large Tier One banks, have invested heavily over the years in corporate FX infrastructure. The major Tier One banks that have FX trading desks, especially, and have built up corporate flows with corporate clients, have a significant investment in infrastructure and a broad range of correspondent banks they use for sending money internationally alongside their trading desks. The majority of banks, however, don't have access to that infrastructure. They usually work with one of those tier banks as their partner. They use Swift to send as a messaging protocol for moving the money internationally.
Taking a step back and looking at Wise, we spent over a decade investing in our infrastructure that moves money across borders very quickly and for a very low cost. That infrastructure ranges from six integrations directly into central banks around the world, that's from the Bank of England, Bank of Lithuania in Europe, Central Bank of Hungary, Australia, and Singapore, as well as over 100 bank integrations. What that means is when you're sending money, say, from the U.K. to Singapore, it comes in via FPS to our bank account at the Bank of England, and as soon as it hits that, we do the payout in Singapore. That gives us the lowest marginal cost of doing a payment and incredible speeds. Last quarter, 55% of the volume on Wise was settled instantly, so available to spend within 20 seconds.
It's not just technology infrastructure. There's over 50 licenses that we have globally, real-time liquidity management, and a global operations team. You put all of that together, and you are able to build this incredible product and deliver these experiences around the world.
Got it. Maybe, can we take that one step further and talk about how you're leveraging a lot of modern technology, such as sort of machine learning, artificial intelligence, for predicting kind of the liquidity needs, how to kind of potentially avoid any kind of money laundering or financial crime, issues, today?
On the, if we move to the cost side first, if you look at our PNL, there are three broad costs on money transfer businesses PNL. There's operational people costs, partner fees, and the costs of realized risk, which is predominantly FX exposure. We reduced this materially over time. Can't disclose how much, but quite significantly through investing in machine learning technologies. That helps us understand where we're building up exposures and how and where to bring down edges. We also use the same technologies to predict how much liquidity we need to keep in accounts around the world to enable us to deliver those instant payouts. The final part, where we leverage our machine learning platform, is in financial crime.
As we build up this large data set of behaviors we've seen, we have over 16 million customers now, live on Wise, then we're able to create this catalog of good and bad behaviors. That gives us an unparalleled data platform to enable us to spot money laundering before it happens.
Got it. Maybe, you know, we discussed the kind of core infrastructure. While the majority of the business is still pure cross-border transfer, you've also started to drive the kind of Wise Account for both personal and doing business. Maybe, tell us what this is and what was the kind of the genesis, kind of around what kind of Wise Account?
Yeah. With the account, what we found with some customers is we weren't capturing all of their cross-border needs. It simply wasn't worth their while to download another app to do the kind of smaller transfers. What we found when we launched the Wise Account, was we were able to support our customers with even more needs. Businesses really love the Wise Account. Let me talk you through why. If you're a business, say, based in France, and you have a customer in Australia, you want to get paid in the from that customer in Australia, what you'd normally do is put your IBAN on an invoice and send it to that customer. Maybe by three to five days later, you'd end up with some euros in your account.
If you wanted to get paid in Australian dollars, you'd actually need to fly to Australia, incorporate a business there, then go into an Australian bank, who give you an Australian bank account, in which that customer could. You can invoice them in Australian dollars, and the customer could pay in AUD. With Wise, you can get Australian banking details in a couple of clicks from wherever you are in the world. This is incredibly valuable for businesses. It enables them to get paid at, like a local, in local currency, which they could keep as local currency if they have local payments to make. We also give them multi-currency cards, which are like expense cards and integrate into their accounting software.
Majority of our business customers have now switched to using Wise Account, and we see strong growth from the Account at the moment.
Okay. You know, maybe we can touch around the sort of the personal side. You've obviously got Wise Account, where again, as a consumer, you can pay like a local. I think, you know, one of the kind of if you could give us some, a sense of, in the context of where Wise Account sits versus many of these other super apps that fintechs have created. Again, apps like a Revolut started for cross-border, cheap cross-border, but now almost becoming neobank-like. You know, maybe help us understand the positioning, the roadmap, and then maybe if you have some case studies around some of your markets. I know U.K., U.S., but Brazil is a new market you've entered, where there's been some significant traction with Wise Account. Curious to get your understanding on that.
Great question, though. When we look around the world, we're seeing emerging neobank leaders in every market. There's very few neobanks that span multiple markets. Take Monzo, which is the largest neobank in the U.K. Revolut has won in some markets in Europe, and Nubank in Brazil, Chime in the U.S., Up Bank in Australia. When we think of how the Wise Account competes with these accounts, these are great domestic bank offerings. Some of them are still in search of a business model, some of them are heading towards profitability. The difference with the Wise Account is Wise has been international from day one. On the day that we opened, and we started doing GBP, EUR transactions, we were live in 2 markets. Today, we're live in over 50 globally.
The question became for us: When does being international be a competitive advantage from an account perspective? Our international infrastructure enables us to support the international segments of customers better than any other provider out there. What that means is, if you look at the market, there is a portion of the market that is purely domestic and has no need for cross-border transfer. The Wise Account is not a suitable product for that. At the other end of the market, there are customers who every single transaction involves a conversion. A customer, for example, who gets paid in USD and is living in Switzerland and spends in CH, in Swiss francs, every single transaction is going through a conversion.
For these customers, the Wise Account should be the best possible account out there, not only in terms of savings, but also in terms of the features that we build to support them. Overall, we're focused on building our international infrastructure and taking it to market. One of the new features we rolled out recently, both for consumers and for businesses, was our assets product, which enables consumers and businesses to earn a return wherever they are in the world.
Got it. Maybe one of the things we wanted to better understand is the differences in terms of the needs of, you know, the kind of personal versus the business customers. I know you touched on some of the capabilities, but also in terms of kind of how you go to market, because you've obviously got KYC and a lot of that, you know, that you need to satisfy. Maybe just talk us through those sort of differences in those two segments, and, you know, the momentum in both seems to be quite strong, but the nuances.
When we look at SMB versus personal, it's the same core features that our personal users know and love, the speed of payments, the cost of payments, the ease of opening an account, that businesses love, too. There's more that businesses need. We've had to build out the business card proposition globally, and it's quite unique. It's a multi-currency card, which means that, if you spend, and you're spending in USD, and you have a USD balance, it use that. If you're spending in euros, and you have a euro balance, use that. If you have neither balance, it chooses which is the cheaper and use that. We've built out employee cards and expense cards for businesses as well. The one other feature that we're quite excited about for businesses, that's live in beta at the moment, is Pay with Wise.
This enables businesses to request payment with a link, and that payment could be through transfer or, in beta now we're live with taking card payments internationally as well.
Got it. Now maybe when you think about sort of B2B, you know, this is starting to emerge both in kind of enterprise, but also potentially as a sizable opportunity in SMB. What is resonating with customers? Are there any particular obstacles for you or your customers that are adopting B2B payments, and how significant could this be for Wise?
Yeah, when we look at the market size, it's much bigger B2B than consumer. What we see resonating, and the really hard challenges, are around KYC and opening accounts for businesses. Opening a business means usually verifying the ultimate beneficiary of the business, which would be a director in the business. We wanna apply our same technology and our convenience to that problem globally, and we're investing heavily in that. Businesses love this as well, as well as the receiving card propositions that I talked through earlier.
Got it. You know, obviously, in recent, sort of a 1 and a half, 2 years, we've started to see rates go up and, you know, Wise Account balances are quite significant. You've obviously now started to offer interest rate product and an asset product to your customers in the U.K., U.S., and Europe. What were the challenges in building out such a product, given the differing regulatory frameworks across the geographies and the fact that, you know, you have an e-money license, not a kind of full banking license? How has the uptake been since you sort of built these products?
Yep, good question. We're live with a variety of products, I won't go into detail, with enabling our customers to earn a return on their balance in Europe, in Singapore, in the US, and in the UK. Firstly, let's just take a step back. Why are we doing this? We've invested in a balance product. Firstly, why we offer our customers balances. We found if we offer them multi-currency balances, we capture more cross-border flows as the product becomes even more convenient. The next challenge we found was that unless we gave our customers a return on those balances, there's an opportunity cost to holding money in Wise, and they would be sweeping the money out and sweeping it back in again.
Hence, we've invested over the last 6 to 9 months in giving our customers the opportunity to generate a return. We've had to develop additional and acquire additional licenses to do this around the world to enable us to do this. Have a variety of products that enable our customers to generate a return. The same core principles underpin the product: transparency on price, fast, and convenience.
Right.
Just to finish your question on update, we've seen significant uptake on this. Customers seem to love this, we haven't disclosed yet globally what the different uptake looks like.
Obviously, we had the kind of SVB incident sort of a few months back. I guess since you're not a bank, could you help us understand Wise is safeguarding customer balances, what are the risks, and are there any differences if I have my money in kind of Wise assets versus Wise Account?
Money is safe with Wise. It may be even safer than a bank. So take a step back. When, when you deposit your money in a bank, banks may, under their banking license, can choose to operate a fractional reserve banking and lend out effectively, some of that money, using it as long as they're within their ratios in doing so. Wise, under our e-money license, we safeguard all our customer balances. This is true on the cash side as well on the asset side. So for every GBP that a customer deposits with us, we safeguard that GBP. That money is held in a, in a safeguarding account, which is outside of corporate funds, and it's ring-fenced within the institutions in which we hold it.
Got it. I wanted to come back to the kind of the, sort of the third leg in the business you talked about up front, which is sort of Wise Platform. Maybe for the benefit of the audience, talk us through Wise Platform. What are the key partners you have so far, and what are the, kind of the use cases in which Wise Platform leverages the infrastructure? Then I have a few more, but maybe we start with that.
Sure. Wise Platform. What we found was that. To take a step back, we don't believe everyone in the world is going to download our app. We need to be embedded within the banks and within the applications that consumers and businesses use every day to manage their money. We built Wise Platform to solve this problem. What Wise Platform does, is it takes the infrastructure that we spent a decade building and exposes the same APIs we use for our own products, Wise Account and Wise Transfer, out into market to our partners. We're live today with over 30 banking partners and non-banking partners, and have over 60 banks integrating at the moment. These range from, in terms of banks, Monzo in the UK, N26 and Up, as well as Aspire in Singapore.
There's a pretty large neobank contingent on Wise. We have established banks. BPCE in France offers Wise to their customers, as does Shinhan Bank, the second largest bank in South Korea, and Mandiri, the largest bank in Indonesia, as well as GMO in Japan. Those are the established banks on Wise. Finally, in terms of non-banks, there are a number of verticals in which Wise have integrated. This ranges from wallets like Google Pay in the U.S. If you do an international payment, it's powered by Wise. Infrastructure companies like Stripe use Wise's infrastructure to facilitate cross-border payments. Accounting platforms like Xero and Intuit have integrated Wise. With Xero, you can pay your invoices with Wise in 1 click. Finally, we have share dealing platforms like Tiger Brokers that have integrated Wise to offer cheap cross-currency to their end customers.
Got it. I know, I think you have something like 70 partners on the platform. Today, it's still a fairly nascent business, I mean, a very sort of small percentage of your volume. What have been the kind of the inhibitors around perhaps this business scaling? Is it, say, integration? Because when you deal with kind of, you know, customers with legacy technology, that can be kind of difficult to connect with. You know, has it just been kind of the consumption or the use cases in which, you know, Wise is used? Just curious what has held Wise for Platforms back, or are we approaching some sort of inflection, maybe, you know, in the coming periods, that could see a ramp-up in this growth?
Wise Platform is still relatively small as a percentage of our overall volume. As the core business keeps growing strongly, we forecast it still to be a relatively small part for the next few years. However, in the future, that's mid to long term, we see the majority of our volume coming in through the platform. To your question on what the challenges are, with accounts for consumers and for businesses and for transfer, Wise is predominantly a word-of-mouth business.
Mm-hmm.
Over 70% of our users come in through word of mouth. Wise Platform, on the other hand, requires a sales motion, and we have an enterprise sales team in Wise that needs to sell. This is number one in terms of what slows down the speed in which we can grow. Secondly, there is an integration effort. With neobanks, it's quite light. We've seen neobanks go live within 3-6 months. With established banks, it takes quite a lot longer, usually over around about a year, in order to integrate Wise to go live.
Got it. At this point, maybe if there's any questions in the audience, please raise your hand. We have a mic that can come to you. Okay, we'll pause. I mean, Nilan, maybe can you talk to us about the raw product roadmap going forward? I mean, you obviously been launching a lot of products already, but, you know, there's features, and then there's kind of brand new products. Curious to get a glimpse of the roadmap. Where, where do you see the most exciting opportunities, and how should we think about the rollout of sort of future product, both on the, you know, on the consumer side and on the personal and the business side?
Yeah. We publish our roadmap. It's available on our website. You can have a look at that directly. When you look at it, you'll see a bunch of launches we're working on in terms of expanding our footprint globally. There aren't any really big material markets left there apart from India and China, which are quite hard work to get into and get access. On the transfer side, you'll see us continue to invest in central bank integrations and other engineering projects that bring down the cost and improve the speed of payments. Expect to see these two move over the next year as we continue to invest in these areas.
Finally, in terms of the account, you can expect to see us continue to build out features such as rolling out the assets product globally and taking that to market, as well as building out more features for our business customers around the receive money proposition that I talked through, as well as the business card.
Got it. If I kind of tie it back, I mean, you talked about the mission to do faster cross-border or near instant, cheaper, more transparent as well. We look at that sort of, you know, banks obviously is where a lot of the existing volume is sitting, and that's moving. Number one, are the banks being kind of doing anything about it, becoming more competitive, whether it's on price or functionality? I know HSBC kind of launched a global kind of money account recently. You've got the traditional kind of legacy money transfer companies, Western Union, et cetera, and then you've got a lot of digital, kind of native competitors. As you look at the advancements on the front, how do you look at the kind of path going forward?
You know, are the banks kind of ever gonna come back and be a risk and stop you from taking more market share? Are there some of your more digital-native competitors that you believe could, you know, could catch up?
Great question. Let's start with the digital-native competitors. The metric that I obsess about is our cost of moving money as well as the speed. What I benchmark competitors against is what is their cost of moving money and their speed. I'm more interested in the rate at which they're moving this down. Whether they're ex-accelerating or not, and the amount of cash flow and engineers that they're investing in this area. We now have over about 600-700 engineers globally, working just on this problem and bringing down the cost. The core thesis in Wise is that whoever gets to building this infrastructure that can move money at the lowest marginal cost, at a high quality, will take the market. That's what I obsess about and monitor competition against. Now, let's talk about banks.
What we've seen on the bank side, talking to large Tier One banks as we take Wise Platform to market, is some of them have seen volumes switch away to fintechs. It may be Wise, it may be a competitor, it may be a neobank. Some of the volumes are between 20%-30% of their volumes switched away, and usually, these are their most valuable customers to some extent. What we see from banks is as these volumes begin to switch, they're left with this cost base and these some lower value payments to support. They still retain the high-value corporate payments as well, and they're trying to think: How can we support these different flows through a heterogeneous architecture?
We're beginning to see some of these larger banks begin to reach out to Wise, to understand how we can support them with the lower ticket value payments.
Got it. Maybe, just doing our last check if there's any audience questions. Maybe the kind of last question is: As you kind of look forward, what kind of excites you most in terms of the different opportunities in front of Wise? And where do you think from the outside in, perhaps the market, you know, is kind of underestimating the potential for Wise to kind of markets to address or pain points?
Yeah. We see a lot of volatility in the short term in our volumes as market volatility and exchange rate volatility means that consumers especially will hold back on sending transfers. This leads to some noisiness in the numbers. In the long run, though, whoever builds this low-cost infrastructure will win and will take the market. As long as we keep doing this, eventually the market will switch to Wise, and that's what I think is the long-term value we're creating here for our customers and for our businesses.
Nilan, thank you so much for the great insights into the business, and thank you for joining us at least virtually at the conference. Thanks.
Thank you very much for having me, Vimal. Nice meeting you all.