As customers clamor for more from their financial service providers, small players of the big financial game are responding with their own versions of transparency.
Hidden inside the $5.3 trillion daily forex trading market are everyday people transferring money abroad to friends, family, or for personal use. Fintech startup TransferWise was founded in 2011 with the aim to eliminate margins and hidden fees that everyday people pay when transferring currencies through financial institutions. When an average person — not professional forex experts — transfers currencies, it’s not exactly clear whether they’re getting screwed on an exchange rate. By splitting the difference between the buy and ask price of currency exchanges and charging a nominal fee instead, TransferWise brings a breath of fresh transparency to a small corner of the forex market.
Transferwise differs from normal moneychangers in one substantial way: TransferWise facilitates transfers between users themselves instead of acting as the bank. For example, someone who wants euros in exchange for dollars is matched with another customer wishing to transfer euros to dollars. So, instead of a bank purchasing the funds at a premium and charging service fees, trades are matched with other users on the opposite side of the trade.
In data sent to Tradestreaming, TransferWise operates over 600 routes and in 35 different currencies, and claims it has over a million customers conducting $750 million worth of transfers per month. The fintech player charges a fee on every trade, visible to both parties before the transfer is complete. By letting users know the exact fees before transfers are executed, TransferWise attempts to eliminate hidden fees by injecting transparency to a small corner of the forex market.
Two studies in transparency
Transparency in the financial industry is an important topic- especially for millennials. According to Edelman’s 2014 brand share study, 87 percent of respondents said they want more meaningful relationships with the companies they do business with, including more transparent communications. “This includes with their money managers, advisors and banks,” wrote the authors of the yearly report that analyzes the changing relationships consumers have with brands.
Deloitte’s 2016 Millennial Survey also demonstrates the importance of transparency. 25% of millennial respondents said that trust, integrity and honesty were the recipe for successful businesses in our age. With this wind at its back, Transferwise has embarked on a distribution strategy that includes bringing its brand of transparency to partnerships with banks.
New banking partnerships
In February, TransferWise announced partnerships with two boutique banks: Estonia’s LHV and European digital bank Number26. Through an API integration, clients of these banks can access the TransferWise currency exchange service directly through their banking apps.
Through discussions with other financial institutions, it became clear that even smaller banks are looking for solutions that set them apart from the status quo, differentiating the services they offer.
“Transparency is very important to us,” wrote TransferWise’s Director of Communications, Jo White, in an email to Tradestreaming. “When you go and buy a pint of milk, you know exactly how much it’s going to cost… we don’t see why international money transfer should be any different.”
By partnering with banks, TransferWise is finding a way to reach more potential users. The company seems intent to sign more of these types of partnerships in the future.
“We hope to work with other banks and companies from other sectors, too. It’s about making international money transfer as easy as possible for people,” White said.

Transferwise is also active socially with its theme of transparency and that comes through in the company’s marketing. The company created the nothing to hide protest against hidden bank fees, and currently supports a Change.org petition to stop hidden bank fees.
Not so fast on transparency
The desire for transparency is palpable, but change isn’t going to happen overnight. TransferWise represents just a microscopic share of the forex market– it’s existence affects less than .01% of currency transfers. Outside of forex, the partnerships TransferWise has made are with banks that already drank the transparency kool-aid. Furthermore, it’s unclear if the relationships TransferWise has made with banks will bear fruit. Number26, one of the startup’s first bank partners and touted as a leading digital-only bank, recently had to shutter a few hundred of its accounts when it found some of its early clients were making an extremely high number of ATM transactions.
Water on a rock
As TransferWise inks more partnerships, the transparency itch may slowly start to spread to other institutions. A total shift towards transparency isn’t going to happen tomorrow. However, like water drops on a rock, as more upstarts demonstrate that they can build bigger, transparent businesses, the possibility of greater transparency in the financial industry inches closer to reality.