How Wise bridges the gaps for banks’ cross-border payments
- Traditional banks have long taken center stage for cross-border payments, but new challenges in a digital-first world leave much to be desired.
- Ryan Zagone, Head of Americas at Wise for Banks, talks about how Wise is helping banks adapt to a post-pandemic world.
Over the course of time, the financial industry has seen substantial changes in international transactions, which can be attributed to increasing globalization and digitization.
Cross-border transactions continue to change and snowball. This year, the global cross-border payments market is expected to reach $156 trillion.
Traditional banks have long taken center stage for cross-border payments, but new challenges in a digital-first world leave much to be desired. To come to grips with the growing demand, businesses are resorting to their partner banks and fintechs to seek solutions that make payments more quick, secure, cheap, and transparent, in order for them to stay the course and meet evolving customer needs.
As a result, payment service providers continue to incorporate the latest digital innovations and technological advances to help FIs process cross-border payments like clockwork.
I spoke to Ryan Zagone, Head of Americas, Wise for Banks, about how Wise is helping banks adapt to a digital, post-pandemic world, and what areas of the B2B payments landscape still have scope for improvement.
What is Wise for Banks? And how does it help banks smoothly transition to a digital world?
Ryan Z.: Background-wise, we built a platform focused on user experience, so transfers are fast, low-cost, and transparent. Covid sparked a significant shift in the market, demanding those types of features in a payment. Employee payroll and employee reimbursement are two of the biggest drivers of growth right now that we see coming into Wise. Companies looking to pay employees or reimburse employees, which were previously using traditional rails, found it very hard to do for international employees – you can't guarantee the total amount received, and you don't always know the fees along the way. This is where our platform comes into operation, where we guarantee the delivery amount, and we're transparent on the fees – enabling a number of businesses to make those types of payments, which they couldn't do before. Due to the pandemic, speed and guaranteed delivery amount became critical, and as a company, we have those features, which now we're extending out to our partners via our API, so partners, banks, fintechs, and corporates can integrate the API and have that same feature directly built within their own offering.
What role do payment strategies play in the bank-fintech partnership?
Ryan Z.: We're at a place in the market where convenience and product features are winning the market. There are banks in the space, there are also a number of emerging fintechs that are scaling rapidly because they found a nice niche in the market with a product feature that meets an unmet need. We're seeing that around payments and we are also seeing that in the small business space. Just like a digital platform performing really well with its strategy today, you have two choices – you can build your own system from scratch, or you can partner – and partnership is proving to be a much more efficient and faster route to market than having to build from scratch.
We have been building Wise for 11 years now – the platform integrates with over 80 countries globally. That's why it is taking investment to build local teams, a local product, and specialized fraud and compliance platforms for this global reach. The partnership allows you to skip all that building and go right to the deployment of the product. We're seeing that partnerships post-Covid took off much stronger than before, as banks needed to innovate faster to become more digital.
Before Covid, many banks offered two options for international transactions – either to come to the branch or fax us a form, neither of which worked very well during the pandemic and in a digital world. So there was a risk of rapid evolution to enable digital operations involving lower costs. As small businesses started to leave banks more rapidly, when a number of fintech providers started entering the market with digital and lower-cost offerings, it led to banks waking up to innovate – either defend their customer base or recapture those that are leaving. I think that's opened a wider window to partnerships and opportunities than I've ever seen.
Last month, Wise launched the SWIFT Receive service – how does it help in cross-border payments among banks?
Ryan Z.: Most of our offerings previously were around sending money – on how we can enable partners to send money internationally. Now that we've optimized that with several partners, they've returned and said it would also be great to receive money. For many banks and fintechs, access to SWIFT is a big investment. We found an opportunity where we can help lower that investment and streamline that access to receiving international payments much faster than building it themselves. By adding the Receive product, enabled partners can have complete international payments, offering both send and receive.
How does Wise protect against digital payments fraud?
Ryan Z.: Wise has a global fraud engine that we've built in-house to monitor fraud across all our customers – and partners as well, to give them the benefit of having our global view to spot and avoid fraud. Additionally, banks themselves also continue to screen for fraud. It is a double-layered screening to ensure that the payments being made are safe and secure.
How do the demands of B2B payments compare to those of retail customers?
Ryan Z.: One of the biggest drivers of growth for us lately is B2B payments. We started out as a remittance company enabling just personal transfers – and today, about 40% of our volume comes from businesses that are rapidly growing in the space seeking the same features as retail customers: speed, low costs, and a fully digital experience. The market now has basically one demand – a great user experience, which is one thing that we have excelled in, and we've extended that same offering to our business customers. The same trend can be seen in the B2B space, where businesses now act like retail customers, in choosing a digital experience and a good user experience. Hence, the players in the market that focus on user experience are winning right now.
What does Wise intend to achieve in the future?
Ryan Z.: Right now, we're focused on expansion – as we feel like we've aced the customer or user experience and product line. Now we want to roll that out to new partners and new verticals. So expanding out to new types of partners that we haven't seen before is on the cards – I don't have a public announcement on that today, but we do have some really cool partnerships in the pipeline, which I'm excited to share later this year.