Great. Hi, everyone, and thank you for joining us. My name is Alastair Nolan. I look after Payments and FinTech Research here at Morgan Stanley out of Europe. Delighted to be joined today by Wise's CTO, Harsh Sinha. Harsh, thank you very much for joining us.
Thank you for having me.
Great. Well, look, I thought we'd maybe kick off with a couple of more introductory questions. Cover off a couple of the kind of key topics that I see out there in the market at the moment. Then we can go into more specific kind of product-related, questions and topics, and particularly kind of dig in on the infrastructure side, if that makes sense.
Maybe just to kick things off, for those investors who maybe are a little bit less familiar with Wise, can you talk a little bit about what the product, and the problem that Wise is really tackling and solving around cross-border FX is, how it's going about kind of executing on that mission, and maybe kind of where the product is more differentiated?
Yeah, sure. Wise is a global payments technology company. We've been around since 2011. We started off as a business that allows you to move money from point A to point B, like one country to another. Basically for consumers in the beginning. Around 2016, we started investing also in building our business proposition, which is again, enabling businesses to onboard and help move money around the world.
Fast-forward a few more years, at that time, we used to be called TransferWise, now we're called Wise. We did a rebrand before we went public. We have added on other products to solve other customer problems that our customers keep saying they have. The big product there is our Wise Account. It's not just enabling you to move money around the world but actually enabling you to hold money in different currencies in Wise.
Right now, you can hold money in 52 different currencies. We also give your local account details. For example, if you are sitting here as a business or a consumer in the U.K., you can get an ACH routing number and account number without ever stepping foot in the U.S., which is a pretty big valuable product if you think about if you're a business getting paid in the U.S. or paying suppliers. You're not doing cross-border FX, you're basically receiving funds potentially in USD when you get paid and then parking them for the next month when you have to pay somebody out, but d oing this across the globe.
As we've evolved, like we've now got different business lines. We've got the Wise Account, which focuses more on consumers. We've got Wise Business, where we are basically building a business account with a lot of what I call the software layer around invoicing, expense management, multi-user access, accounting platform integrations that enable this to become a primary account for businesses.
A third business line is the Wise Platform, which is still an early-stage enterprise product, which other banks or other third-party companies would integrate our plumbing and infrastructure and our APIs to move money around the world still in their interface. Think about it as like a replacement for SWIFT and correspondent banking. That's kind of like the value proposition, the journey we've been on.
Right now, like, you know, we move over GBP 100 billion a year across our network that we've built. Last, you know, three months, we've had like 5.8 million active customers. Overall, 60 million customers across the world. Yeah, in deposits, we hold about GBP 9 billion in deposits so far. GBP 9 billion in deposits across our Wise Account, and that's growing.
That's a really helpful overview. I think one of the areas and kind of one of the things Wise has been really vocal about is this Mission Zero, this desire to continue to cut prices.
Yeah.
I guess I often find investors kind of maybe struggle with how you end up towards zero pricing and still have a profitable business model-
Yeah.
... that Wise currently ha s today. Maybe you can talk a little bit about that. Is it really the concept here kind of scale economies shared? Is that the way to think about it? Can you just walk us through how that works in terms of the economics?
Yeah. I mean, I think scale economies shared is like a good one-liner. just generally the way we think about it is that I would challenge all of you in the room to think if you fast-forward 10-15 years from now, will moving money around the world be much cheaper than it is today? Or accessing your international finances be much cheaper than it is today? We fundamentally believe it will be. the cost of actually doing international finance should not be this high.
Back in the day, you know, when a lot more Western Union had like these different branches, cash was being handled a lot more, the risk was much higher. The markup had to be much, much higher for the risk you're carrying, but now it's just bits and bytes moving across systems. We are showing ourselves that as we connect and build our infrastructure, that we connect to different parts of the domestic payment network in each country.
Like, you know, we're getting more and more instant payments. 52% of our payments are now instant, which means from origination to destination in less than 20 seconds. Like, we are the biggest player in this space with the market share we have around the number of instant payments that are happening. You know, why am I talking about instant payments when you talk about pricing? I'll give you an example. Most of the calls that we get from a CS perspective, customer support perspective, is when you get anxious about your money.
If you're moving money to, let's say, fund a down payment in that retirement home that you're trying to buy in Spain, if you get any inkling that it's been slow or there's some challenges, you'll pick up the phone and call. That adds a cost. If it's instant payments, before you pick up the phone, the money's already there, so you don't have to call me.
That drives economies around, like, you know, if it's faster payments, then we'll be having lower costs. We turn around and, like, give you that price and the cost savings back to you. That drives volume. If you have lower pricing, we do believe that people will eventually, differentiation will be only around price or mostly around price to, as the first thing.
Most people switch to Wise, first reason, price, and they stay on for convenience, instant payments, and transparency. As we build more and more volume and more word of mouth, basically, we'll have a big flywheel that's moving. The goal here is, it's a very weird mission to say if you were to say a mission is, money without borders, $0.10 and instant.
The goal is when you're setting a mission for the company, you say like eventually free or essentially free. It's a very big inspiring part for our organization to say, we do believe that this is where pricing is heading, and we should be able to continue to drop prices. If you fundamentally believe that the industry is heading there, it's better to be a leader than a laggard in this.
We see it in how we are seeing our flows overall move. Do I believe that we'll be at Mission Zero in the next seven to 10 years? Less likely. Very less likely. Do I know how to get to, say, from 30 basis points to 20 basis points for our teams from moving money from GBP to say USD? Yeah, I think so. Like, that's the overall thesis here. As we do this, we are already seeing what-- As our company has evolved, we've had other revenue streams.
So, when we first started, we had one revenue stream, which was basically transfer of money. Now we have the account product, we have cards interchange. We're providing an assets product, which also gives us an ability to manage your funds and also, take a fee on that. There are other things, adjacencies that open up where customers ask us to do different things for which they pay money for.
Maybe just to take that example you mentioned, say in the U.K., getting from 30 to 20 basis points. Is the right way to think about that ultimately the profitability on that transaction is the same?
Yeah.
You're able to take cost out in around the cost to execute. Maybe you can talk around what exactly it is you do to enable that?
Yeah. We have a fundamental thesis that we do not cross-subsidize, and we basically want to build a profitable and sustainable business for the long run. We've done this since 2016, so it's not like this is a new thing for us. We've been profitable for the last seven, six, seven years, and we'll continue to do that. For every transaction, we have a profit margin baked in and that's set.
The only way we drop prices is when we know we can sustainably do it and have it drop for the long term. The way then we do it is by finding efficiencies around cost either, i t's removing partners. If you think about Wise, the biggest competitive advantage we've built is this network that we've built. The network is basically connecting domestic payment systems in different countries to our systems. Every time we go directly to the rail. For example, we are directly connected to FPS in the U.K. Before we connected to FPS, we were using a partner bank.
Obviously when you're transacting with a partner bank, we had to pay them fees. When we got down to the FPS, which is like the bare bones scheme level integration, our fees went from GBP 0.60 to the partner bank per transaction to GBP 0.06. Now that we can turn around, still bake our margin and return the rest to our customers with like an operating cost that we also have. That allows us to basically scale.
When we do that, volumes grow, and virality in the product grows, NPS goes higher, and that's how it continues to move. Same thing we would do with as we get more volume from our platform customers, we basically bake that in. As things go down, volumes go higher, we can leverage better costs, better pricing, and then lather, rinse, repeat on price.
Kind of consistent reduction in fees offset by lower costs.
Lower costs.
I guess you alluded to the fact that there's other products as well coming in and things like spending on the Wise card. You can talk a little bit about the dynamics there. That take rate, that other take rate has moved up quite nicely and kind of maybe what's driving that and the outlook there.
Yeah. I mean, this is why, like you have a product and technology guy on the stage and not a finance guy. Generally, I would say the account's becoming more and more relevant for people, right? Wise, I think we've seen as we've built the account product, is becoming more of a multi, what do you call it? Like a multi-use product, right? Fundamentally, I see that people who onboard to the Wise Account are 50% more sticky than if they just came and used our transfer product. We are seeing that more, evolve more.
We're also positioning our product a little bit more because it's a better experience if you already hold money in Wise, because if you hold money in Wise, then generally, if you're especially sending to a Wise customer, it's all instant no matter where they are in the world, but also the managing of the funds is much easier. Then you're more likely to use it as a primary account, so that increases the adoption of different features. If that happens, then take rate goes up, right?
The core principle that we think about is how many customer problems are we solving for you, customer X, Y, and Z, right? If you're solving more than one, we're probably going to grow together and help hopefully solve the right things for you as a customer, that increases our revenue too.
You mentioned the Wise Account there, and I think in the introduction, you talked about kind of GBP 9 billion of deposits. That number has been growing really quickly.
Yeah.
Can you talk about kind of why that is? What's driving it? I think the kind of add-on question then is around net interest income and kind of how you're thinking about managing that. I know there's a desire to give as much back to customers as possible, but maybe you can kind of clarify how you're thinking about that, even particularly from a kind of product point of view.
Yeah. Deposits have been growing pretty healthily. I think partly it's driven by just the number of countries we can launch the Wise Account in. If we didn't exist in a country and now, we can, and you can hold deposits, that tends to grow. Also, we're seeing a healthy clip on businesses . I think the SMB segment in general is pretty poorly served across the world for business banking. If you're doing cross-border especially, then it's actually even more poorly served. The businesses are actually gravitating more towards Wise Business or Wise Business account. Businesses tend to have more money to hold. That's why its kind of like correlates a little bit.
Generally also, I think what's happening is people are understanding that if you have cross-border needs and you are doing treasury-like work or you have to pay suppliers and like in and out of, like moving money in different currencies, you're better off holding in the Wise Account because the money is more liquid. I'll give you an example. Right now, if you hold money in NatWest, don't know if there's NatWest bankers here. If you want to take your money out online, every day you have a limit of GBP 25,000 . That's not very helpful. You have to go to the bank or bank branch and do a lot larger transfers.
If you're doing payroll and stuff, like it's actually harder for you to do those larger payments if you are doing cross-border, if you're holding it in your regular U.K. bank versus if you hold money in Wise, where we don't have the limits, and you can just do the transfers when you want. Those features actually have helped, I think increase inflows.
Around your question on net interest. Like it's still early days for us. Like, we do believe that we should be sharing what we earn on those balances from those balance customers or account customers. We should be sharing the returns with them. We've launched a product around cashback in the U.K. We are paying off also returns in Europe, and we are also starting to pay returns in the U.S.
It's still early days on like understanding how much of those returns and yield we should also keep for our own operating income and basically making sure that we are investing back in the business. You know, still a little bit more to be done, like as, you know, we are starting to roll out this product. Generally, the thesis is that we will take some of the interest income that we have and put it back into product engineering, servicing, providing a better onboarding experience for businesses, such that this volume of business tends to grow and the customers tend to grow.
I think if you look at the U.K., we are one of the highest, you know, interest payers right now on assets. Then we are opening up more ways you can earn returns also. We have the interest asset product, which allows you to put your money into treasuries. The best part of that product is that it's instant access, so it's linked to your card. As opposed to if you kept money in your savings account in Barclays and then had a current account, you had to move money, which would usually take a day to move money to be usable.
Here, this product value investing in treasuries is linked directly to your card, and you can instantly have access to those funds. Some of this is like very, you know, at the forefront of basically what a current account should be doing. Should always be doing this, but you're getting better returns now. These things are also driving deposits to come in.
Maybe it's worth touchi ng on kind of some of the benefits that you see more balances being within the Wise ecosystem have. Does that I presume help in terms of speed to execute, cost to execute, that you kind of have them within the ecosystem? Is that the right way to think about it?
Yeah. I think the biggest advantage from a customer perspective is the network becomes more valuable, right? Suddenly you have instant payments as an expectation for more and more payments, right? Because if I have funds already on Wise, I can instantly convert. I can get the best rate at that point versus like if you're moving, let's say GBP 250,000, and you have to like to do it in 10 tranches because your bank will only allow you to pay in GBP 25,000.
Y ou know what conversion rate you'll get. You will basically be able to predict when the delivery of that funds will happen. If that person who you're paying to is on Wise also, all of that is in a ledger entry in one database. No correspondence needed. All of that's done, you get on with your life. I think that experience becomes much more valuable. For us also, from a management of liquidity perspective, we don't have to wait for, like, you know, managing different pots of money for that transaction because treasury is easy. The funds are already there. We instantly convert it. There's no FX exposure. Like, you know, it just becomes easier to operate but also cheaper to operate.
That makes sense. I guess I think you've kind of alluded to it, and you've been pretty clear more broadly around the desire to reinvest, both from a kind of the operating leverage on the kind of core business of the FX business, if you like, and then also to kind of give back an element of the benefits from NII. I think there's maybe some confusion or misunderstanding around whether or not Wise has suddenly gotten this NII tailwind and is then cross-subsidizing and kind of overinvesting in the core business. Can you maybe just help clarify that?
Sure.
Kind of, I guess, confirm the fact that you still are maintaining that kind of level of margin built in and there's no cross-subsidization?
Yeah. We basically think about building Wise as a sustainable business in the long run, right? Yes, we right now have this tailwind of interest income. We don't believe that this is going to be true if you look at a 10-year horizon or maybe 15-year horizon. We're not going to get hooked into this interest-
Changing every day at the moment.
Yeah, changing every day. Do we believe that the interest income is here to stay like above zero for the foreseeable future? Yes. Are we investing some of that back in the business? Yes. Fundamentally, nothing's changed in our pricing per se. Also, we are not hooked in the sense that, yes, sure, we are investing some bits of that income into product engineering, right?
Which we believe will give us a return on investment pretty quickly versus switching pricing very quickly on our customers right now. If we had to, we would switch that pricing pretty easily, and we've done that over and over again, historically too. I actually don't think it's any different than major banks. Like the banks also take in that interest income, and they invest back in the business. They, you know. Actually, we are giving the return back, and we are thinking of keeping a very small sliver, which will be our operating investment that we would be doing.
Kind of conscious around doing so, doing it in a sustainable way.
Exactly, yeah. Fundamentally, we believe that as a management team, we talk about this quite a bit. Like, we don't want to be in a place where if interest income went away tomorrow, then Wise is suddenly not profitable or not sustainable.
Yeah, that makes sense. Maybe just on the kind of topic of reinvestment, from your kind of CTO role, maybe you can talk about some of the areas in which you're most excited around investing in and kind of lead that into the product roadmap?
Yeah.
kind of where, you know, what Wise might look like in one, two, three years' time.
Yeah. So, if there's one thing I want you all to take away, if you've not heard me or others say this from Wise, is Wise definitely is the core competitive advantage we've built is the infrastructure. Payments is an infrastructure business generally. Like, whoever can run the infrastructure at scale should win. Because that will lead to economies of scale, lower costs, faster payments, and eventually more volume coming in because the experience that you build on top of the infrastructure is way better for consumers and businesses.
Our biggest investment continues to be in increasing our depth in different countries, so connecting to local payment systems. You know, we now have access to the Australian payment network. We are one of the first non-banks to be given this access. We are directly integrating there, which would mean instant payments for all Australian transactions in and out, and also settlement account with the Reserve Bank of Australia, which means lower costs.
We'll continue to do this. We'll continue to invest pretty heavily like we have done over the last 11 or 12 years now on continue to expand and deepen this infrastructure. The other thing we are doing is we are taking the products that we already have in certain markets, like the asset's product, the interest assets, and moving that into enabling it for more customers across the world. You should start seeing, we just announced that we now have the license to launch this product in Europe. Also, we'll bring it to Singapore, hopefully soon to the U.S.
That also makes this Wise Account more relevant to more customers across the world. The final investment that we're doing, we're doing more, but like generally, I would say the thesis is around Wise Business, like I said. Businesses are pretty poorly served. SMBs are pretty poorly served by most banks. $9 trillion moves across borders just by SMBs every year, and we think that's a very big pie that we can help, you know, build a great product for.
That doesn't mean just the infrastructure play, but also like the software layer on top that SMBs need and use. Whether it's receiving in different currencies, having local account details, invoicing functionality, integration with accounting software, expense management, enabling you to have multiple user access so that you have controls on who can spend money where. If you're a 20-person team, you have a sales team on the ground, where are they going to use the card? Where they cannot use the card? How much limits you want? All of this is like business banking software, I would say, which is not usually present in most banks that the SMB is backed with.
You mentioned the infrastructure. Maybe we can dig in a little bit on that and kind of specifically where you see Wise's infrastructure differentiated both from a, you know, versus traditional banks, but then also versus kind of maybe more modern players, like a Revolut or a Currencycloud, and kind of talk about kind of where you see the real moats.
I think for most banks who still move most of the money around the world, they're still using correspondent network, right? Correspondent network, the problem is basically depending on the number of legs in the transaction, you can't predict how fast or how slow a transaction will be, so it's a pretty poor experience. Usually, you'll go and you'll see for your transaction, the delivery estimate will be two to five days.
In this day and age, when my son can predict when his toy will come from Amazon or what time and when the doorbell rings, like two to five days for money to arrive on the other side of the world is pretty crazy. Also, the number of correspondent hops you have that determines pricing and how many people are touching the funds.
Generally, I think most banks are still running SWIFT and correspondent networks. We have a very different strategy on this, where we have built a network which connects directly to local payment systems. If you're doing a transfer from, say, a money movement from USD to AUD, we just use the domestic rails to get the funds into Wise, which is domestic rails are cheaper and faster, and they're getting cheaper and faster every year.
On the other side, in USD, you'll use ACH or maybe Fedwire to move money in, and then we turn around and push the funds out through NPP in Australia. That's basically it. There's two legs. Wise is in the middle. No middleman. That's how we can drop fees. I think it's a very unique network.
Yes, others have tried to build this and people have done it, but not at the scale that we have now. There are some places, let's say in Singapore, who've done this for like connecting to Thailand or India corridors, but not globally. People in the U.S. who've done it to connect to Mexico or to, say, Philippines, but not globally at the scale we are. The more we do this, the better we get at it, the better access we get to the rails in every country.
Because one of the other things that people sometimes don't realize is this is a pretty learned skill to do direct connections. Direct connections are not just technology plays, they're regulatory play too. If you're a central bank who manages and runs and regulates the scheme that moves money around the world in the domestic, sorry, in the domestic market, your biggest thing that you're worried about is financial stability. Banks have access to the schemes. They do payroll, they have money movement mostly being done through them in the local market.
Non-banks, when they get access, it's not like a given. You have an exception-based use case. When we go and have these conversations with central banks, our track record of running these schemes and connecting directly to them gives us a much bigger edge because we can show them that we've been doing this for a while. If there's a probability that somebody's going to get access, it's usually we are in the consideration set more than others.
From a regulatory perspective, that's the biggest hurdle. Then you have to deploy the technology and run it at scale at, in the, on the ground usually, because that's what the requirements are. Building data centers and stuff. Finally, that kind of answered the question a little bit on like the newer competitors. If you look at, let's say it's Revolut. Revolut is a great business, I think. They're doing amazing stuff. They're more focused Initially, we felt like we were more on a collision course back in the day when they ran FX as a loss leader.
Now they charge for FX. They realized that you just can't run that as a loss leader anymore. I feel like they're building more of a holistic domestic account, maybe in some other countries too, but primarily focused here in Europe. Like, we are not looking to add on more and more features like phone insurance, travel insurance, and stuff like more domestic use case.
For us, cross-border is the biggest use case, and whatever enables you to have a great cross-border account. Our investment is more in the infrastructure, where I think a lot of players are still running on, layers, basically, with other providers, some of whom use us. That's basically the Wise Platform play.
Interesting. I guess kind of one of the benefits as you get bigger, more scale, you see more volume, better data, you can then kind of leverage that to kind of have more transactions take place on us or to be netted. I'd kind of love to hear a little bit more about how you're approaching that from a kind of treasury management point of view, the technology there. Just got back from our TMT conference in San Francisco. AI and machine learning are like the key themes. Really interested to hear how-
Yeah.
... kind of Wise is thinking about that.
Yeah. We've been investing in machine learning for like, you know, for a long time. Even before, like, you know, we went public, we talked about this too. Our treasury system, I think, is one of the most sophisticated systems at the scale of company we are and for the infrastructure we've built. There's a few advantages we have.
Number one, compared to a lot of banks, our technology is closed loop in the sense that the entire network, the treasury system that we built on top, has access to all the data in the network. Versus I'll give you a comparison of HSBC, for example. The Hong Kong HSBC technology stack would be very different than the U.K. one.
If you're trying to put a treasury system on top of that to understand the flows, you have to, like, figure out how to connect all the data into one system. It's a pretty big technology task to do, and it sounds easier than it actually is. For us, that is a big advantage of, like, knowing where the inflows and outflows would be and then predicting and building algorithms on top of that. Above 50% of our treasury is basically our treasury trades are basically machine learning predicted.
We actually, on a Friday night, going into a Friday night, would know how much liquidity in INR, for example, where the markets would open earlier than here, do we need to make sure we can continue to pay out when India opens up and have a great experience, right? That prediction and that ability to basically have that data to be able to act on it is like a huge advantage we have. The other bit, as you said, is, as the Wise Account grows, and again, the network gets bigger, then this prediction requirement goes lower, right?
We can net off transactions. We already have the liquidity, so we don't have to front anything. Those things happen within our ecosystem. The experience is still much better because if you're on the other side of Wise customer too, then you basically have instant. Even when banking hours are not open, doesn't matter because we can settle your transaction immediately on Wise. It's just a much better experience. As we get more and more Wise Account adoption, I think that scale effects will come into play and the experience is going to get much better.
That's very interesting. I think kind of thinking back to the time of the listing, you made the point that all of this results in, you know, faster speed to execute, lower cost, and that drives much higher NPS scores-
Mm-hmm.
... kind of virality around marketing. I think at the time it was 2/3 of customers-
Yeah.
... are through word of mouth. Maybe you can give us an update as to kind of what you're seeing there and-
Yeah.
Is there any thought to maybe almost push a little bit harder on that, right? You could potentially accelerate the customer adds as a result. Just kind of keen to hear how you think about that.
Given our customer base and the scale at which we are adding new people, like the numbers are the same. About 2/3 is all coming through organic growth, as we call it. We do fiddle around a little bit on like trying to understand we run experiments sometimes on like marketing payback in general. Generally, our investments we keep within nine to 12 months of payback.
Yep.
Most would pay back less than six months in general. Sometimes we experiment with some business corridors. We may say, let's try and break it a little bit. That's what we call test budget. Generally, we still feel to run a profitable business at the rate at which we are growing, the underlying thesis of, you know, continue to invest in a building a great product such that, you know, people have higher NPS and then they drive virality. That's the best way of growing the business, basically.
Understood. Maybe switching gears a little bit, I know it's on investors' minds. In relation to SVB, I know there was a statement or a blog post put out, I was interested to hear in one of the meetings we just were in prior to this, how actually what you saw in terms of demand coming for-
Yeah.
... opening new accounts. Maybe you can kind of share some thoughts there.
Yeah. Just on the technical side, like from SVB perspective, for Wise, we had like no customer funds and no customer deposits from SVB. We had like a very small like payroll account that we used to pay our U.S. employees. That was there. That's also obviously taken care of because it's the deposits are covered. When we had an RCF, which seven banks and one of them also was SVB, which is generally that's our that was our exposure generally, which is very, very minimal.
If you think about what happened, we had our board meeting on Thursday, we were sitting at dinner, suddenly a bunch of us, our phones started ringing around the table. They were basically some founders, some venture partners, either WhatsApp-ing or texting or like calling and asking how quickly we can get some of our founders, our companies, an account. What was pretty clear was the reason why they were reaching out was obviously there were dire straits for quite a few folks.
Generally, when they were going to larger banks. The wait time could be two to four weeks to open a Barclays business account, due diligence or KYC. We could open a track where we had a deployed team with an email address to say, "Hey, tell us which fund you're from, who you got a contact from, how much money you're going to move. These are the documents you need. Send it to this email address, and then we'll have somebody call you back." Right?
We can basically onboard businesses pretty quickly. Some businesses got onboarded in three hours, right? It's not because we are better in onboarding and being clear on like, you know, how we want people to onboard. We have the same requirements as our banks. I think the founders were vested because they were in urgency to make sure they got an account, so they had all the docs ready.
They already had their venture partners on the phone, said, "I need you to give me your KYC documents," and whatever. It was a pretty interesting time, where usually something that would even for Wise may take two or three days, was like done in like a few hours because people are incentivized to get things moving fast. People ask me, "Okay, so how much inflows and what do you think about the impact of the business?" I think generally it's still four days in, right? Did we see more Wise accounts open? Yes.
Do we think this is going to be true and everybody's going to continue to like, have this account and put a lot of funds with us? I don't think so. Some of this will flow through and potentially end up being parked in somewhere else. Some of them may be for the first time discovered Wise and understand the features that we've built, and they go, "Oh my god, this actually helps my business very well. Maybe I should make it the primary account." We don't know yet.
I fundamentally believe that if you are a business that has a lot of cross-border needs, then parking your funds or some of your funds in Wise Account will probably make it much easier to operate. You know, I had a founder who I invested in, an angel investor too, and like, you know, 90% of their funds were stuck in SVB. Thankfully they're not out of business right now.
Like, generally, what is he going to do now? He's going to open three or four accounts and park the money all over the place, right? Things that people didn't think that they would have to do. Some of this will flow through, and some of this, I think, will be an uptick where people will see Wise as their operating account, but it's still too early to tell.
Are you kind of thinking about... I know you don't lend out any money, right?
Yeah.
Funds are backed one-to-one. Is that something you can almost maybe communicate and kind of-
Yeah
... capitalize on?
I never thought... Like, we had questions from businesses that we never had before, like, "Okay, like, how do you make sure your funds, the funds I keep with Wise are protected?" Like, you know. We had to explain our safeguarding regime. The blog post has been out for a long time. What safeguarding means. It means we don't lend money. We're not allowed to lend money. We've given a license.
One-to-one, all customer funds have to be parked in separate accounts from company accounts in a different account . Like we park them in, you know, tier one banks, like whether it's JPM or Goldman or whoever else, and then also some in Treasuries. What we did then, we put out new blog posts explaining where we park our funds.
Depending on the regime you are in, if you're licensed in the U.K. as a business, then you will get certain holdings. If you're licensed in the U.S., then you get certain holdings. I think it is pretty interesting how suddenly everybody was like trying to get under the hood to understand where the money gets parked. We also have launched this interest as product, which is basically parking your funds into a money market fund and backed by government bonds.
Actually, that's the best product we think people can use because then you don't have the exposure to banks either, because you're parking money with the government. We give you very short-term liquidity on that. It's actually been a pretty interesting learning for I think quite a few folks who never ask these questions. On a headline, yes, we don't lend, so we don't create leverage on customer deposits. One-to-one, we have all the funds to pay back if we need to, in liquidity, liquid manner.
Maybe just on the broader competitive landscape, kind of maybe you can lay out kind of what you see as like Wise's share currently across maybe personal and business, and I guess more importantly, where you're seeing clearly with the growth rates of, you know, 50% + volume growth, where that share, those share gains are coming from?
Yeah. I think we are around 4% on overall consumer market share across the world. Much bigger in the U.K., of course. We started here earlier and like, I think here, like way above 10%, 12%. I don't exactly remember the number in the U.K. Market share numbers can also be very hard to-
Yes.
... explain. On SMBs, the market is so big, like, you know, $9 trillion moving across borders for SMBs every year. We're like less than 1%. That's where I think we have a lot of growth still left. That's why we're investing a lot there to build a much better account experience for people to be able to like, you know, make it a primary account for them. Yeah, I think that's basically, that's basically it.
Understood. I'd also be keen to hear a little bit around the hiring environment. I think Wise is clearly still in growth mode. See your LinkedIn profile tells people you're hiring.
Yeah.
You're probably one of the few fintechs that is still in that kind of growth mode and adding headcount. Be interested to hear what you're seeing in terms of, kind of the war for talent. Is that easing?
Yeah.
Compensation, things like that, particularly for you within your engineering team.
Yeah . My biggest line item in engineering and product budget is salaries, right? Competition is a big part. Generally, I would say. Again, the thesis has been the same, whether it's about customer, pricing or how we think about profit margins as a business or investing in our talent and team, that we have. We historically, even during COVID, we could have grown faster, but we kept our margins the same. We grew sustainably. We've not changed actually anything. I think other companies have changed what they're doing. We are operating the same way. We've been profitable since 2016. We'll continue to be profitable, and we'll continue to invest in the longer run. That's why we have not done anything drastically different.
I think it is other companies who took a very big investment and thesis that this, you know, gravy train in COVID is going to continue to be there, and they're over-indexed, and now they're having to deal with the repercussions. I think Adyen, like, I know Ingo pretty well. You know, it's kind of similar mindset that they have. Actually, from a market hiring perspective, things are a little bit better.
I think good talent will always find a home. Good engineering and product talent will always be in demand. I think there's a little bit more, it's a little bit better and easier hiring environment from a perspective of less competition and less crazy counteroffers that were happening last two years. People are looking more thoughtfully on this company that I'm joining, will they be around for the next two or three years? They're not profitable. Are they sustainable? Will I have to change the job again in six months? I think those things have made it easier for us to hire.
I wouldn't set expectations that comp has dropped through the floor or something like that. No. You know, maybe the growth on comp has slowed down for a bit. We'll see how that goes. Last two years, comp's gone up quite a bit for most good talent in tech space.
Okay. Still kind of seeing how it plays out.
Yes.
Maybe one last one from me before I open it up for questions. Can you talk to us a little bit more about the Wise Platform business? I know you mentioned it in the intro-...
Yeah.
... kind of what exactly it is, how big the opportunity is, and kind of maybe any traction and kind of wins that you've seen over the last couple of years.
Wise Platform is growing pretty quickly, but it's still a smaller portion of our overall volume and overall business. This is a very long-term play that we're investing in. Yeah, we've had some good wins. Last year, which was the end of the calendar year, we basically now have cornered the market in the U.S. around business banks who you would go to as a new business. Whether it's like business neobanks like Mercury, Ramp, you know, Brex and others, like, they're basically like there's only a few headline banks you can go to, and all of them have now switched their plumbing to Wise and using the Wise Platform and the APIs we have. Similarly, we are now starting to see more traction from established banks.
We just went live with Bank Mandiri in Indonesia, which is the largest bank by assets in Indonesia, second-largest bank overall volume. We are seeing more and more of these conversations getting easier. In our earlier part of our journey in Wise Platform, it was much easier to say to a bank who didn't have any cross-border, to say, "Why would you integrate with SWIFT? Here's an API, way better, much better, you know, integration, easier to manage and better experience. Use that." Now we are starting to see some players who were always SWIFT first starting to change and integrate with us. Still early days, but, like, the momentum and the direction seems pretty promising.
How do those kinds of conversations go with, let's say, more traditional banks?
Yeah.
Like, are there any sticking points in those negotiations? Because obviously, on the one hand, you're taking share maybe on the personal side-
Yeah.
You're looking to work together on the on the kind of B2B or enterprise side on a white label basis. Kind of, I guess, any tensions there, basically?
Yeah.
I'm trying to get at.
Actually, it's the same discussion. If I go to a bank in the U.K., it's the same customers. We share customers basically, right?
Mm-hmm.
For certain transactions, they're choosing to come to Wise, and for certain transactions, they're sticking with the bank, right? Our pitch is like this is not an enterprise discussion. It's a consumer discussion. These are just your same customers. Would you rather have them do those transactions where they're banking with you, and then is this powered by Wise? Would you want them to continue to move over, right? Interestingly, actually, depending on the region and the country and the bank, like, usually people switch when the savings becomes big enough, and the savings becomes big enough to open a new account and go through the headache of setting up a new account when the volume or the number is big enough. Those are the customers that banks want to keep and not lose that volume, right?
It's a little bit of like, actually, it aligns pretty well with the business. I think what, two or three, four years ago maybe, most banks never thought that we'd get to this scale, that we could keep this pricing and sustainably run this. Now I think a lot of them are realizing that this is actually working. We are a profitable business. This is not going to go away. It becomes the question is: How do they build that moat? Will they build that moat by defending bec ause the other problem they have is you also have neobanks.
The neobanks are coming around going like, "I want those customers too, I'm already integrated with Wise, and I already have a better experience, and my convenience factor is better." They're kind of getting hit by both sides. It makes the conversation easier to say, "Actually, it should be powered by Wise." Guess what?
We'll do some rev share because some of the things that we don't need to do anymore. If we are onboarding you to Wise, we'll have to pay for KYC, checking certain documents on you, all of that stuff, and maybe CS, call volume. We may not have do that if you are a bank customer, we'll give that savings back to you. I think it's resonating more.
Okay.
There's a lot more challenges, like some of the banks, they have a lot of legacy infrastructure. I met a bank, CTO recently, a CPO. They were like, "We release our mobile app once every six months, forget about changing the integration and using an API." Like, the hurdle rate there is very, very high on the amount of investment we have to do. Those are some of the challenges they also have. Even if they want to move, it can be pretty challenging. you know, we have to help them.
That's helpful. Thank you. Maybe I'll stop there and see if there are any questions. Yep. Got one here.
Just following up on the platform.
Just grab the mic there. Thank you.
Just following up on the platform question. Is there any risk when you enter into those agreements with banks that you have some residual liability if they haven't done their KYC properly?
Yeah. We still have to do all the checks, as we are part of the funds flow. We have to take the documents the banks have. We will run our own algorithms and our own checks on them. If there's something lacking, then we have a process to go back and ask for more from the customer. Depending on the contract and the integration, it could be the bank asks, or the customer knows we are in the funds flow, we can ask. Generally, it's the bank's interface that asks for it. Regardless from a regulation perspective, everybody in the chain has to do their own checks. That, you know, that's not really a big thing.
Great. I think we had one more just down at the back. Thank you.
Hi. Giacomo from Italy. Very happy Wise customer since 2017.
Great.
Two questions. The issue of where our money is, I think it's key. You're not a bank, so there's no deposit guarantee. How do you choose your partner banks around the world? The second question is also to look who is sending the money to who and why is a key issue. We know some of your competitors has had problems on this side.
Yeah.
What's the policy there, please?
Cool. Let me hit the second one first, and then I'll hit the safeguarding bit. Yes, I think everybody, as I said right now, has to do their own due diligence on the sender, receiver, and the funds flow in the middle. Actually, if you compare providers, it is just based on, like, how good they are at doing this. Like, you know, we've had a very good track record on this, over the last 11, 12 years, and like, we're very confident on our fin crime engines that we've built, including the amount of investments we've done around machine learning also, and using technologies that find pattern, even like when there are people who are trying to work through networks and stuff, and like, you know, like we can find those patterns pretty well.
Again, going back to, we have the global view on the data, so all the data feeds into one place, it's easier to train these models. We have a human who reviews everything when things are flagged. On the safeguarding aspect, actually, the question I would ask, and this is the question that most founders are asking recently after this issue: What is insurance after a certain amount? Maybe for consumers, FSCS said GBP 85,000. That's okay. It covers a lot of consumers. If you're a venture-backed business, GBP 85,000 is nothing. Like my founder, who emailed me, who I invested in, had GBP 40 million stuck. What's the insurance?
Our standing, this is why we publicly write about this, is yes, money is parked in these like tier one banks, also money is parked in treasuries, money is parked in government funds, also we cannot lend. The creating of leverage is the problem. If you cannot create leverage from a license perspective, actually one-to-one availability of funds is much easier. We do have a lot of our funds in top tier banks, also short-term treasuries, also we do due diligence on those banks who we are banking with. Hopefully it answers your question.
Great. Thank you. I think we've just run out of time. Harsh, thank you so much for joining us.
Thank you very much.
Appreciate it. thanks for everyone's...