TransferWise rebranded as Wise last week. If you missed that, you’ve hopefully been in a total lockdown media blackout (lucky you).
Wise wants to align its brand with its vision for international banking – serving expats, SMEs and as a platform for other financials. In the expat segment, the news this week of HSBC pulling out of US retail banking, leaving Citi as the only bank with a global retail focus, will have been well received at Wise HQ.
And Wise has built a dominant position serving the group of consumers above remittances and below the high-value personal transfers of overseas properties and investments. As Wise expands its base in the competitive SME and platform segments (and few are betting against it), is this core mid-level consumer now under attack?
Each year we like to compare the growth of Western Union, the leader in remittances, with Wise. This past year has been fascinating. As our conversation with WU’s CFO highlighted last week, WU has seen a big jump in its cross-border flows driven by the account-to-account space – Wise’s bread and butter.
Versus the trajectories of previous years, WU is now on a growth path with its digital offering gathering pace. Nevertheless, we still expect Wise to continue to gain ground overall, despite many players in the space beefing up their account-to-account offering in response to the pandemic.
It’s also worth noting that WU’s overall take rate has declined as a result of their shift to digital, while Wise’s has been broadly stable (WU’s take rate is still much larger than Wise’s – data here). WU also operates in thousands more corridors than Wise, with cash products counting among their flows offering a different mix overall.
Pricing, value-added services and a trusted brand are going to be key differentiators as this battle plays out. We’ll provide you with a front-row seat.