WorldFirst’s Mike Ward: ‘There are alternatives to the incumbents’

WoldFirst's Mike Ward

This week’s guest on the podcast is Mike Ward, the chief revenue officer of WorldFirst, which is a strong competitor in the international payment and money transfer industry. We discuss why historically it’s been so hard, expensive, and frustrating to move money around the world and how new financial technology firms like WorldFirst have improved the experience.

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Below are highlights, edited for clarity, from the episode.

Why people feel it’s so hard move money internationally
“There are two reasons why people still feel like it’s hard to move money around. The first is that they’re probably still using their banks. We believe, in most markets around the world, banks own 85 to 95 percent of the market share in money transfer. The banks have been trying to incorporate technology and make transactions easier. But with an incumbent, you still have to go into the branch and talk to a teller. The teller is a generalist and not an FX expert. You have to fill out a large form and pay high fees.

The second reason is that most people and businesses don’t realize there are alternatives. Financial technology companies have disrupted and changed the transaction in terms of speed, price, and complexity.”

Financial technology begins to disrupt banking money transfers
“The original approach to competing with banks in money transfer probably began 25 to 30 years ago. We’re going to compete against the banks with pricing and service. Travelex would be a good example. To them, service was picking up a phone. Have a matter expert, not a generalist, behind the counter. They’d have better pricing because Travelex would go out and make a market and trade with the big banks. Higher volumes resulted in better pricing Travelex could pass on to their customers.

Then technology came and said let’s make technology core. Let’s not have feet-to-the-street sales people running around to land one customer at a time. Let’s not have it phone-based. We want our technology to solve the issues, answer questions, and conduct the transaction. That’s really what customers want. They don’t want to talk to someone to manage the transaction. The next wave of disruption to banking over the past 10 to 15 years created an interesting dynamic as we’re seeing a lot more collaboration between fintech and banks.”

Growth in the industry
“Consumers are 20 percent of our business. Those needs come and go and we need to continue going after the next client. It’s a good business but there’s a lot of competition out there, like Transferwise. Corporate customers and e-commerce is very big for us. In the U.S., a lot of people still deal with the banks. Many owner/operators of businesses don’t understand currency exposure of working internationally. If you look at e-commerce, growth is being driven by e-commerce marketplaces you’ve never even heard of.”

With new bank partnerships, TransferWise tries for transparency

transparency in finance via Transferwise

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 Petition


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 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.

Photo credit: Georgie Pauwels via Visual hunt / CC BY

How Remitly’s Matt Oppenheimer built a mobile-first remittance company

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Matt Oppenheimer is CEO of Remitly.

What is Remitly and where did you get the inspiration to found it?

Matt Oppenheimer - Remitly
Matt Oppenheimer, Remitly

Remitly is a mobile payments remittance service that is changing the way people send money internationally. I was working for Barclays in Kenya where I saw first-hand the challenges and strain on people trying to send money to family members overseas. We have taken careful steps since launching in 2012 to create a fast, reliable and transparent service.

Payments is getting really competitive — how is Remitly different?

Historically, remittance services have been defined by companies like Western Union and MoneyGram offering high and hidden fees, poor user experience, and limited mobile and web options. For years, tech companies have worked to erode the financial services industry. Remitly isn’t the first company to disrupt the status quo, but we are taking a very different approach from our peers. We’re putting our customers first but going super deep where the biggest addressable markets and pain points exist.

The typical software company in our industry counts vanity metrics such as the number of regions served. Our measures of success are different. We value customers above all else so we offer a great experience at a reasonable cost.

You provide service into 3 specific geos — why did you chose those? What goes into the decision about which corridor to service? Are you going to launch new corridors?

We purposely focus on three targeted corridors – India, the Philippines and Mexico – to get the product right and deliver on promises to customers. They are also three of the top five largest receive corridors in the world – U.S. to Mexico alone is the largest international remittance corridor. It takes a lot of work to perfect a money transfer between countries, regulators and financial institutions.  Now that we have this product, we’re scaling up globally and continuing to stay focused on the largest corridors where there are the most customers to serve.

How important is mobile in today’s remittance market?

It’s not just important, it’s critical. We built the first truly mobile-first remittance company. While others are trying to move offline businesses to the web, we focused first on mobile. We were the first to enable Touch ID for iOS users, we were the first remittance service with built-in messaging capabilities and we were the first and only service to provide an app for both the sender and receiver. Everything we’ve done with mobile has been in service of enabling easier and more meaningful experiences for our customers.

It’s important, however, to recognize when mobile fintech solutions are not solving customer pain points. One hype-filled example is mobile wallets: stored value accessed via a mobile device often built by carriers and banks. I offer one data point to cut through the hype: If you take a random set of 100,000 money transfer transactions at Remitly, roughly 19 of them will involve mobile wallets. That is a whopping 0.019 percent of our customers, generally tech-savvy folks who are using a mobile fintech service, who use the app to send money to mobile wallets.

What’s in the pipeline for 2016?

We’ve grown our company into the largest independent digital remittance firm in the U.S. and we’re committed to continue to grow our business and build new features into our product to enable deeper and better connections for our customers. In 2016 you can expect to see us open up new receive and send corridors and introduce new product features to our service.