There’s a lot of activity in global payments going on right now. Interestingly, global payments was a popular foothold for many of fintech’s first generation of startups. Companies like TransferWise proved that there were huge opportunities in improving global payments and that it can be done profitably.
Now, commercial banks, correspondent banks, and consortia are taking aim at trying to wrestle this business back: Swift is massively promoting its global payments initiative and JPMorgan made news recently with its Interbank Information Network.
Who will win at the end of the day? TransferWise CTO Harsh Sinha thinks these consortia initiatives and their focus on blockchain miss the mark. He joins us on the Tearsheet Podcast to discuss global payments, the eventual winners and losers, and to drill down on some of the innovative work he’s doing at TransferWise.
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The following excerpts were edited for clarity.
How do you manage 250 employees split over 6 offices?
I have a strong team of leads across the offices and I do travel quite a bit. As we started growing, we had to decide: should we go where the talent is and work in a more distributed manner? Or, should we hunker down and try to make big inroads into one market?
We decided to go where the talent is. So, we’re distributed across the world. We also wanted our teams and engineers to be closer to our customers. For example, we opened our Singapore office early last year. One of our main goals was to get people who would use our Asian product — we’re expecting a lot of growth in Asia over the next few years — as part of our team.
How do you split up development activities across offices? Who works on what?
We have an idea about growing by doing integrations into local banking systems. For example, the reason TransferWise is so much cheaper than the correspondent banking systems is that we don’t use international pipes. We do that by making direct transfers into local banking systems. Our regional teams are really focused on getting these integrations done.
We also have a team working on our platform in these local offices. So, we could have a team in Singapore working on our platform which can be shared across all our teams in the U.S. and Europe.
SWIFT is making noise about its new gpi program for international payments. Can you explain it?
With gpi, it’s still an integration standard where banks have to integrate the new API. The new standards have tighter messaging deadlines and settlement cycles for the banks using it, but it still has the big overhead of having each and every bank integrate it into their systems. This needs to be rolled out across the world.
From a different direction, you have JPMorgan’s Interbank Information Network built on Quorum. What’s going on there?
The press release that came out was pretty interesting. The biggest thing that misses the mark is what they’re trying to solve won’t improve the customer experience drastically for the majority of customers moving money abroad. With TransferWise, you choose your destination and for the majority of our users, the money they’re sending arrives within one business day. With the correspondent banking network, it takes three to five days to get money to the other side.
What JPMorgan is solving with the INN is more information sharing between banks for compliance requirements. It’s very common in the correspondent banking system for a bank further down the chain to request more information from the banks that initiated a transaction. This can take up to two to four weeks. This is the problem INN is solving but it won’t impact the majority of people sending money internationally.