‘It doesn’t happen overnight’: How Wise is expanding its banking relationships internationally
- Wise may have shortened its name, but its roadmap continues to expand.
- At Tearsheet’s Big Bank Theory Conference, Lindsey Grossman, director of product, and Ryan Zagone, head of Americas, talked about how the company is leveraging APIs to accelerate growth.
Almost two years into Covid and the shape of the workforce is changing. With more remote employees, gig economy workers, and freelancers, the path between paycheck and payee is becoming more zig-zaggy than ever.
Wise, formerly known as TransferWise, is sitting right in the middle of this shift. Its main motives as a company have always been within the realms of international payments.
Wise was started with the goal of being a cheaper alternative for transferring money abroad. Users could transfer money to a bank account in a different country by either paying Wise through a debit or credit card or making a local bank transfer to Wise’s bank account in their country. Wise charges a service fee, and customers pay the midmarket exchange rate as an addition to that.
When Covid hit, the company saw SMBs leave their banks to find the cheapest way to transfer money abroad. Wise got 10,000 new SMB customers every month of last year, according to head of Americas, Ryan Zagone.
“Small businesses are now acting like remittances. They're more cost conscious, they want something digital, they want transparency, and a guaranteed delivery fee amount,” said Zagone.
At Tearsheet’s Big Bank Theory Conference, Zagone and Wise’s Lindsey Grossman, director of product, dived into how Wise has been responding to this shift in order to meet a growing demand for international transfers, including expanding its services, opening up its APIs, and partnering, rather than competing, with incumbents.
The company is ultimately going from direct to consumer and direct to SMB to exposing APIs and partnering with banks and other companies.
One thing Wise has done to expand its services is implement what it calls a multicurrency account, which allows people to hold money in over 50 currencies. This has come in handy as small businesses increasingly work with customers outside their home base. These customers may not want to have to fiddle around with transferring money to a random bank in another country. The multicurrency account can act as a solution.
The multicurrency account also comes with a debit card, which can act as a workaround when a person is traveling and wants to find the cheapest way to pay for something with the currencies she has available to her.
“If I show up in France and I want to buy a croissant and I don't have enough euros in my balance, it will pull from whatever balance I have enough money in that has the cheapest conversion rate for me at that moment, at that point of sale,” said Grossman. “And so that really helps customers have global mobility and save a lot of money.”
In addition to its new type of account, Wise has been redefining its relationship with banks, fintechs, and other companies. As international payments become more important to small businesses and consumers, companies are looking for new ways to act fast and enable these payment methods.
“International payments have been under-invested or ignored for quite a while, particularly on the user experience front,” said Zagone. “And we're at a point now where we're seeing attrition from traditional banks. And they're thinking, how do we improve that? How do we defend these customers from growing fintech threats? How do we retain a customer for growth?”
Wise presents itself as a solution to these establishments. Its APIs have been adopted by different players in the industry and allows their users to make international payments.
Silicon Valley-based Stanford Federal Credit Union, for example, started using Wise over a year ago. The company today has 15 times more Wise transfers than regular transfers. Google Pay, meanwhile, started integrating Wise back in May. Today it’s the most popular feature for new GP users.
The sudden shift in opening up APIs is what Grossman says made way for ‘hockey stick growth’ at the company. From her experience working at Stripe, as well as building APIs for Intuit, she says she’s seen firsthand the power of platforms and what API sharing can do for a company’s expansion.
“You build a capability, Ryan and his team go in, sell it, and build those partnerships, and all of a sudden, it's up into the right,” said Grossman.
In October, Wise said its Q2 revenue was $182.97 million -- a 25% increase compared to the same quarter last year. Meanwhile, just under 4 million customers transferred $24.8 billion via Wise in the second quarter -- up 36% compared to last year.
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But in opening up its APIs, Wise has a new challenge it’s had to deal with, and that has to do with API documentation. Grossman said that because the product team is now building these products for other engineers, it has to make sure documentation is as clear as possible, not only so that other engineers understand it but also so that the sales team can easily present these documents when pitching the new product to partners.
“It's definitely a cultural shift from a product perspective. And it doesn't happen overnight. We're still on that journey,” said Grossman.
Wise’s partnerships also gives it access to other firms’ APIs. That means the company doesn’t have to build things on its own, which could accelerate its expansion strategies going forward.
“We're talking about embedded first as the strategy going forward to retain leadership. Embedded allows you to do product development without having to actually take that on,” said Zagone. “We can leverage the expertise and the niche skills of our partners.”
When asked whether there may be a tension between bank partners who could see Wise as an eventual competitor, Zagone said that’s a ‘nonissue,’ as the company doesn’t really focus on lending, or any other functions outside international payments.
“Our core focus is so narrow on international. That's our expertise, that's what we know, and we've really stayed in that language.”