If the future is about digital payments, financial companies that deal in cash have an interesting decision to make. Do they stay the course, and just do what they do better? Or, do they have to upend everything and redefine the value they provide?
Travelex is embracing the latter approach. The 40 year old company is probably best known for its foreign currency exchange. The UK-based firm has stores in 34 countries around the world, supports 80 currencies for millions of customers, and processes 70 transactions/second. But senior management definitely saw the writing on the cash wall — that as people use cash less and less, Travelex would need to evolve to stay relevant.
Redesigning the company of the future
Travelex knew it needed to change and to do so, it started a massive process of transformation that began at the top of the company and is making its way down to the trenches. In February 2014, the firm hired Sean Cornwell as its Chief Digital Officer. Cornwell, who’s a senior marketing pro who comes out of tech firms like Google and eHarmony, began building a skunkworks team from scratch that functioned as a company-within-a-company, tackling the future of Travelex.
It wasn’t long before the company decided this structure wasn’t sufficient for a full transformation, so the company reorganized digital and products under Cornwell. The team now numbers 80 members.
“Senior executives said that digital is our strategy, not guys sitting in a corner,” said Simon Veingard, Travelex’s global director of products and transformation. “It’s core to our business.”
New products, new company
The digital team quickly got to work developing its first new product, Supercard. Designed for UK travelers, Supercard frees its users from what Travelex calls “bank card roaming fees”, foreign transaction fees and unfavorable forex rates. Because these fees are somewhat opaque and users don’t generally see what they’re being charged in real-time, creating a better international card is a tough proposition.
This new product was designed to reach people who aren’t currently Travelex customers. “We look at our market through a lens of pre-trip and in-trip,” explained Veingard. “We sell most of our products to our customers before they embark on a trip. During a trip, though, we haven’t had a great opportunity to interact with our customers. Launching Supercard was a means for us to capture new customers who travel and spend abroad and aren’t necessarily Travelex customers.”
Supercard was formally launched in June after a pilot that included 2,000 users last year. The new card links up to an existing UK bank card and when a card holder uses Supercard abroad, Travelex does two back-to-back transactions: one via the merchant and one off the user’s UK bank card. To the card companies, it looks like a UK transaction, so no foreign transaction fees are triggered and MasterCard’s wholesale exchange rates apply. A user can check an accompanying Supercard app to see how much fees she is avoiding by using the Travelex product.
Test small, fail small
Cornwell, Veingard, and the entire digital team are infusing Travelex with the ethos of a startup.
“We talk all the time about lean startups, agile programming, and failing fast methodologies — these can be complete anathemas to traditional retailers,” remarked Veingard.
This new way of thinking definitely infused the product development and launch of Supercard. In fact, to see if there was interest in such a product, the team ran an exploratory marketing campaign. According to Veingard, within 24 hours, the app had been downloaded over 100k times, causing Travelex’s servers to crash.
To help get the word out, the firm partnered with UK-based personal finance influencers. Travelex did a deal with Martin Lewis’ MoneySavingExpert.com, one of the UK’s largest personal finance and banking websites, that has over 11 million subscribers to its weekly newsletter.
Travelex is continuing to lay on the marketing juice and just kicked off radio and outdoor campaigns, including bus shelters and on the tube. The firm has a lot planned for social and also has partnerships lined up with big players in travel.
No fear of failure at the organizational level
Going in to dev mode on Supercard, the firm didn’t know if it would be a success. And that was OK. As part of its digital transformation, Travelex was willing to take its chances and discover what works. After the pilot’s success, the board decided to invest more heavily in the new product, rolling it out on a more permanent basis with a plan to scale it.
Veingard says the team learned a lot operationally throughout the process. Conducting two simultaneous credit card transactions requires some creativity and Travelex has made moves to own more of the end-to-end process. The company recently changed the program managers for its backend processing, moving to WireCard after using a smaller company. This has helped speed up the cycle times.
Travelex also changed its pricing model — Supercard originally was offered for free for use at POS and ATMs. Though ATM usage is a small percentage overall, the firm added what it considers to be a relatively small fee (2.99%) for pulling out cash on the card (2.99%).
Travelex has every intention of succeeding with Supercard, but the development and launch of this product has a lot of other knock-on effects for the new organization. It was a case study in demonstrating that a 40 year old finance company can innovate. Second, it’s a way for the firm to acquire new customers who wouldn’t normally consider Travelex. Third, it’s a foothold into interacting with customers throughout their trips. Last, Supercard can act as a beachhead to cross-sell other Travelex products.
“I was really surprised by how the entire business, top down, has been willing to invest in a new product that has potential to cannibalize some of its existing business,” said Travelex’s Veingard. “It’s willing to invest, like a startup, even when the path to profitability isn’t certain and the chances of success unknown. That’s unusual.”