Meet the Branson backed fintech business valued at over £1bn

Financial Services | Growth | Reports | South East | Technology

Fintech has risen to prominence in recent years, and with the ever-changing world of economics and rise in tech, there are many opportunities for companies to get ahead of the competition.

One of these companies is TransferWise – a London-headquartered firm that has revolutionised the way in which businesses and individuals send money across the world.

Since it was founded in 2011, the business has experienced exponential growth through its low-cost platform that allows multi-currency transfers through independent accounts.

The concept behind TransferWise was to allow international transfers, where the broker received a very small commission, whereas major banks charged a lot more – all meaning that the user saves money for international business.

TransferWise payment routes are different to other financial institutions. Instead of transferring the sender’s money directly to the recipient, they directly pay the recipient in the local currency. This process avoids currency and border conversions.

Head of Business at TransferWise, Stuart Gregory explains: “The main difference with TransferWise is that we make sure payments remain local, which has let us lower the cost of international transfers and also speed the process up. Local bank transfers and payments work pretty efficiently, and so we have been able to join up with all these local banks to create something that makes international payments faster at a lower cost than traditional banks.

“If you send money abroad with TransferWise you’re really paying into a local account in your home country, and we pay out the required amount from an account in the destination country. As much as possible, money doesn’t have to cross borders.”

Funding

When the company started in 2011, it was off the back of  $1.3m in seed funding from investors such as former Betfair CEO David Yu, PayPal co-founder Max Levchin, and Wonga co-founder Errol Damelin. The company also received growth funding for winning the 2011 Seedcamp – a European seed fund from a collection of 30 investors.

Two years later, TransferWise announced that it had received a further $6m through an investment round, led by US venture capital tech fund, Valar Ventures.

The following year, the business announced that it had received a further $25m in funding and Richard Branson joined the business as an investor. Before the end of 2016, TransferWise had raised over $120m in funding.

It was around this time that the company was valued at over $1.1bn.

Gregory summarises the company’s growth. He said: “Today, we have over four million customers and transfer over £3bn every month. If you compare that with what they would be paying at a bank, our customers are saving around £3m a day.

“The growth of the company has been incredible. When I joined, we were doing a quarter of the volume of business we do now and had under half the 1200 employees we have today. TransferWise has grown so fast.

“One of the most notable things about what we have achieved is that for both businesses and consumers, the growth has come from people recommending it – to friends, family and other businesses – 70% of our new users are acquired by word of mouth.

“That has been driven off the back of us being very focused on making a product that is so much faster and cheaper to the other alternatives.

“When I joined, we were working with just a few thousand businesses in total, but now we have 5000 new business customers every month. We have seen some rapid growth there.”

In September 2018, the business announced record revenues of £151m.

‘The Robin Hood of the banking market’

This exponential growth has given prominence to TransferWise and how they can change a business that does a lot of international money transfers.

By taking money away from the traditional banks and saving customers money across the world, they have been compared to fictional heroic outlaw, Robin Hood.

Gregory comments: “There isn’t a reason why money should cost so much to transfer internationally. We just don’t understand why it would cost 3 or 5% to send  £1000 to Europe through your bank. Our view is that if you think about international money transfers, eventually it should be almost free. We should be able to move money internationally as easily and quickly as it is to do nationally.

“Domestic bank transfers in the UK are completely free using your bank – they are also almost instant. We do not see a reason why international transfers should be any different – that has been our mentality.”

Fintech innovation

With the UK being recognised as one of the most progressive Fintech nations in the world, TransferWise is just one of many names that are making a global impact from a UK headquarters.

A large part of this is having regulators and innovative tech hubs that are encouraging and giving the platform for tech businesses to grow and revolutionise a sector.

Gregory said: “For us at TransferWise, one of the big milestones we hit earlier this year was becoming the first non-bank in the world to have direct access to the Fastest Payment Scheme in the UK, and have a settlement account with the Bank of England. A central bank, giving a Fintech business, TransferWise, access to their banking infrastructure – we are essentially the first non-bank in the world that have access to a central bank account.

“This kind of innovation is why many Fintech companies are choosing to set up in the UK and why other regulators around the world are looking at how the UK operates.

“We are at a tipping point, where TransferWise is shifting from challenging some of the norms around international banking, and we are becoming a standard within the sector for what transparency should look like.”

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