Wise’s partnership with Swift helps modernize X-border payments for FIs

Recently, global money mover Wise and Swift announced a new Correspondent Services offering that will empower financial institutions to make sending money internationally faster, cheaper, and more convenient for their customers. 

By combining the strengths of Swift's global financial messaging network with Wise's payments infrastructure, financial institutions and banks looking to enhance their international payments services can do so without needing to implement any major changes to their systems.

Joining me on the podcast is Steve Naudé, Head of Wise Platform at Wise. We discuss the integration between Swift and Wise and its impact on traditional banking's pursuit of better customer experiences.

The big ideas

1. Wise and Swift Collaboration: Wise and Swift have partnered to create a new Correspondent Services offering for international money transfers.
2. Improved International Money Transfers: The collaboration aims to enhance the process of sending money internationally, making it faster, more affordable, and convenient for customers.
3. Leveraging Swift's Network: Wise will utilize Swift's global financial messaging network, known for its extensive reach and reliability in the financial industry.
4. Innovative Payments Infrastructure: Wise's expertise in innovative payments infrastructure will be a key component in the new offering.
5. No Major System Changes Required: Financial institutions and banks can benefit from this service without the need for significant changes to their existing systems, simplifying the adoption process.

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The following excerpts were edited for clarity.

Background

Steve Naudé, Head of Wise Platform at Wise: I'm managing director of the Wise Platform. Listeners may be familiar with Wise for our consumer apps and our products for small businesses, where we are building the best way to send, receive, spend, and manage your money around the world. We provide these to over 16 million customers today. That's the core of where Wise has come from.

In the last few years, we started launching Wise Platform, which is the part of the business I look after. We're taking all of this infrastructure that we've built to make those products and serve those 16 million customers to allow others -- banks, large enterprises, fintechs -- to leverage that infrastructure, so they can build their own products for their own customers in their own existing products.

Working with partners

We mostly target banks. This solution is an area where banks have historically struggled to build really awesome products for their customers, whether it's by some of their legacy infrastructure or some of the services that are available on the market. That's where we really want to help lots of customers join Wise because we can give them a better service than their bank. The whole aim of Wise Platform is to help the banks give that same, if not better, service to those customers from within their banking app.

Banks' hurdles to integration

If you go to a bank, as we have historically, and say, you know, here's a fantastic API that lets you build a product, Some banks are changing fast, but some still struggle to support API-based integrations. Perhaps some of the legacy infrastructure they're using Isn't yet set up to plug in third parties. This is changing very fast. But that has historically been a bit of a blocker.

But even if you can do an integration, it's still a technical project. And it's competing against all the other projects that that bank wants to do. The thing you have to remember about most banks is they're inherently domestic, they're serving a primarily domestic use case. If you think about how most people use their bank, it's for a current account, loans, mortgages, credit cards. Cross border payments, whether that's sending, receiving, or managing, is typically a secondary priority or a secondary feature.

So you can have an amazing product and solution, but it's competing against some of this core fundamental improvements the bank wants to make to their core offering. That's what we've been trying to change with our Swift partnership and some of our other products to help make this even easier for banks to get access to this technology.

Wise's new correspondence services

We've worked with banks on this: large banks, as well as many of the world's largest neobanks like Monzo in the UK and N26 in Europe. We've been working to serve them for a while. But what we've announced recently and trying to move into is -- I talked about a speaking the bank's own language, already integrated into this network called Swift, which many listeners may be familiar with, which is the typical interbank messaging network for cross border payments.

Rather than saying to banks, you now need to come and speak our language, you need to integrate our API and talk to us in our language, we're saying we'll come and listen to your language, just route these Swift messages to Wise, instead of your existing correspondent. Maybe it's a new currency you want to add, advisors, a new correspondent, and we'll process those payments using our infrastructure. You get the same speed, the same low cost, over 99% straight through processing -- all those same benefits, but without the need for a major technical project.

Early feedback

We announced our integration at Sibos, which is the Swift conference which all banks around the world attend. We got to speak to hundreds of banks and we got real time feedback, which is nice. So a lot of excitement, a lot of interest, definitely moves a whole number of conversations forward quite fast. We do have our first first partner starting to go live with this now, not yet announced.

Revenue model

We see ourselves as infrastructure. We charge a fee for our infrastructure. The bank can then charge whatever they want of their customers. That's their revenue model. We just have a pretty simple fee-based structure.

Real time payments

It's always mind blowing when you click send and then your phone is buzzing for payments on the other side of the world before your screen's even refreshed. 60% of all our payments are now instant end to end. And when we say instant, we mean sent, processed, all financial crime checks run, sent and received and available to the beneficiary in less than 20 seconds. As we keep investing in that infrastructure, and as the infrastructure around the world keeps getting faster, this number is going going up increasingly quickly as well.

Bank payment options

Our aim is really optionality. There's lots of these new schemes around the world, whether it's new instant domestic payment schemes, the increasing surge of customers using mobile wallets to manage their money more than bank accounts, the rise of things like payments to debit cards. What we want to do is be plugged into all of these pieces of infrastructure and give the best possible rail for the problem we're trying to solve for that particular customer or payment.

If you have an amazing correspondence set up today that's working really well, it's super fast, super cheap, amazing. Keep using it. But there's probably currencies you're not yet supporting. There's problems in your existing network where you're not getting the service or speed or price point that you want. Or you don't have access to some of these new rails, whether that's certain instant schemes or mobile wallets or cards. We're not going to replace everything. But we want to increase optionality on the network via tools like Swift, to help banks offer their customers the best possible solution to the problem that they're trying to solve.

Selling into banks and getting prioritization

The most successful partnerships we do is when there's a very clear problem to solve. Because first of all, it's very easy to go into something with an idea that something could be better, but really articulating what is it we're trying to trying to make better for customers and how can we use this to do that is the challenge.

We've got some really interesting examples. We're helping Deel with their global payroll, which is an increasing use case. These are contractors and freelancers that want to get paid immediately, I've done the work and I want to get my money now, not at the end of the month in some other payroll cycle. We're helping them say, your customer feedback is, people want money quicker, they want money sooner -- as soon as that project is done, I need to get paid. I don't want to get a monthly withdrawal or something that's going to take a week. That customer feedback is really the driver of the project.

And when you launch this and it goes live, and you hear via the partner the feedback they get now, it's always really exciting to hear how excited that's made their customers. So it's really trying to find that specific problem to address, and then figure how we can use this infrastructure to solve that problem. And that's often what brings this right up their priority list -- being able to articulate what this end state looks like and why this is going to help help solve it.

A lot of it is also streamlining. We've done this quite a lot. Now we work with banks around the world and we've been able to really streamline things like the compliance due diligence we need to do on each other. We know what they're going to ask us; we know what we're going to ask them. It's about really making that a smooth as possible process to go as quickly as possible. And having a track record of being able to do these implementations quickly, really helps de-risk the project, shorten the timelines, and find a good space in that roadmap to execute on this.

Consumerization of cross border payments

One of the trends that we've seen a lot of is the consumerization of lots of traditionally boring business banking services. So whether it's Gen Z, or Millennials or whatever generation, but you have a set of individuals who have become used to a very different set of experiences in their personal lives. I can order a taxi and be halfway across the city from my phone in a few minutes or have food in London delivered in just a few minutes.

That's the kind of experience that people have come to expect from their business tools, like their bank or their payroll provider or spend management platform. We've seen a lot of focus from these providers in that experience, an area that was probably less traditionally important in the past, that's driven by this wave of just incredible consumer product experiences setting the bar for what a business tool experience looks like, as well.

Whether that's driven by a certain demographic or not, I'm not sure, but it's definitely been an awakening to the expectations customers have on payments, driven by the the services they get in their day to day life. The same speed, the same quality, the same ease of experience. People don't want to wait a week, or go into a branch. It's not going to work anymore.

Extending B2C capabilities into the platform

Our aim is that everything we build at Wise for ourselves should be available to our partners. That's kind of the whole purpose of the infrastructure strategy. We have worked with partners on other products, whether that's card issuing, receive flows, some of the collection products that we've built for ourselves. There's definitely more we are doing there. With some of our newer products, like the interest product, we still need to figure out how to take to market via the platform, but the strategy is for everything we build to be available to partners.

We're building these things now internally with that partner-first mindset, a bit like the AWS approach of "we build it for partners, we can use it ourselves". This has been a really interesting shift to see the company really thinking if we're going to do this, what could it actually be? It's useful beyond just customers. You see people suddenly thinking and getting into all sorts of interesting use cases that the rails we're building could be used for.

2023 priorities for Wise Platform

The main thing we're focused on in 2024 is correspondence services products. We've seen the demand, heard the feedback, and seen the level of interest and excitement around this. Most of our effort is going to be really rolling out, scaling, supporting this product for an increasingly large number of major banks around the world. The next major focus area would be how we make sure we can scale with these partners and give them that level of service and experience that customers expect. We want to scale this globally as we talk to banks in 20 to 30 different countries, looking for ultimately the same solution to the same problem just with a different regional swing on things.