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Overview of TransferWise

The chosen organisation for this paper is TransferWise which is commonly known as Wise. The organisation is London-based financial technological organisation which caters to remittances and financial services (Hassan 2020). Organisational challenges are the difficulties that are faced within the internal and external market environment, which prevents them from achieving the organisational objective and goals. The aim of the paper is to conduct a review on TransferWise and analyse the challenges faced within the company and the potential issues it might face within the next five years. In the discussion section of the paper some of the major issue that will be mentioned are multicurrency cross border system and the issue faced in single currency cross border system. The challenges that will be identified from the company will follow the step of firstly mentioning the problem as well as derive the solutions for Wise. With reference to the issues faced within the organisation, solutions will be mentioned based on theories such as facility of acquisition and merger and Ansoff Matrix. Similarly, the potential challenges will be analysed and reviewed with the assistance of SWOT analysis, as it will provide with accurate information (Burnard and Bhamra 2019). In the last section of the paper, an analysis will be conducted based on Wise payment data and review the turnovers of the company during its year of operation.

TransferWise which is commonly known as Wise was founded by Taavet Hinrikus in the year 2011. The company assist the customers, that is both the individuals and the business firm to transfer money all across the world. The company however, stands to be one of the largest money transfer businesses in London, with its main ambition to be a global hub for the foreign exchange services (Maxwell 2018). Wise advertises about its service to be eight times cheaper where the banks use the real exchange rate. Therefore, this industry is regarded as the value chain towards the middlemen where each of the person can track on fee and charges in order to raise the cost of source.

Some of the major issues that can be analysed within the industry is that Western Union and Transfer Wise are facing an increasing pressure which will assist to reduce the cost of making the money more accessible to the masses. However, the company in particular has been associated with the declining revenue growth and is facing issue in falling fees since 2012 (Hassan 2020). For instances, the forex revenue was $1333 million as on 2012 and the fees amounted to $4210 million as on 2012. On the other hand, the Wise charges fees with an approx. 0.5% of cables, which thereby makes it’s a highly desirable option for the sender. It does not appear to be sustainable business model as it allows to offer a lower amount of fee with higher cost of maintenance.  

One of the strategic issues faced by Wise is while offering a great value to the users and at the same time does not free from challenges. Transfer Wise has its compliance team and is further registered in the UK Financial Service Register which is followed by the anti-money laundering and fraud compliances in almost every country the business is operating in. If the organisation fails to manage and prevent the criminal act, it can regulate the body which had imposed sections and suspended the business, thereby depending on the level of importance (Ya 2020). Secondly, considering the issue of setting up within cross border it can be analysed that the business firm had faced four key challenges and they are cross currency payment required an FX conversion, the issue of liquidity management, high degree of technical interoperability across the payment was difficult and lastly, the compliance risk and cost are related and they are typically higher in the cross border.

Challenges Faced by TransferWise

With the current business model, the conversion is conducted by one or more banks along with the payment chains. The FX conversion is difficult where it is able to provide the most cross broader payment system as it requires a balance sheet and the willingness to manage risk (Rom?nova et al, 2018). This is the place where the FX conversion becomes a part of the system service offering and is typically conducted by a close affiliated bank. On the other hand, the challenge faced by the business firm where the cross border and the multicurrency system caters to settle against the willingness to offer intraday liquidity to the foreign users. Thus, the cross-border liquidity is conducted via liquidity management which is conducted via prefunding which catered to additional credit exposures in the financial system. Lastly, in 2020 the expert had raised certain privacy and ethical concern all around the digital Covid-19 immunity passport (Zukin and Papadantonakis 2017). Hence, Wise was assisting the company which had concealed the immunity passport and is not a perfect solution which the founder would not have launched publicly until there is scientific consensus on Covid-19 immunity.

Some of the major issues that can be forecasted for Wise to face in the next five years can be analysed with the assistnaces of the external and internal factors of SWOT analysis, that is considering the factors of weakness and threats (Al-Alawi 2018). Firstly, it can be analysed Wise can face major challenge by staying up with the competition in the era of fintech. There are many small size business firms that are utilizing the technology and data in order to deliver the financial services within the next few techniques and raising the stake for the established financial institution. There are many small size business firms that are taking up some of the financial industry, long standing and are searching for directions in order to stay in the game and are even providing the shiny upstart in order to run for the revenue. Secondly, the organisation can also face issue with the technological advancement (Hassani, Huang and Silva 2018). There is various business growth which is significant for the financial firms but it must spend money in updating the technology to raise. As per the reports of Protiviti, in the financial service firm comprise to invest within technology such as workflow automation and robotics so that it is able to enhance the efficiency and reduce the cost of associating without operational, compliance and risk management. Wise should aim to modernize its technology and data storage, so that in future it is can enable big data solution as AI-supported digital customer support assistant (Khan 2016). Therefore, Wise should consider that there is a consolidation platform and it therefore provides more difficult, efficient and customer friendly experience all across the internet and physical location.

Secondly, the threat of the business firm can also be analysed within incumbent fight backs, despite its initial being at the point of disadvantage it came to implement the new technology and some banks are reinventing its ways to conduct international money transfer (Khan 2016). There is also increase rate of competition which is now intense for the customers who are ultimately winning the most. Thus, the firm is rather desperate to analyse way of reducing feeds and better offer within the exchange rates rather than to lose out on the business. There are many banks that are altering to blockchains technology and it had been analysed that the Western Union and Ria Money Transfer which have been trialling Ripple, a cryptocurrency which is high speed processing capabilities and there is an overabundance of bitcoin which is founded on money transfer apps. Lastly, the issue that can be forecasted for Wise is that it might lack exceeding consumer expectation. There is consumer who continue to expect a lot from the business firm. However, there are numerous ways of personalizing the service from the financial providers (Bhatt and Bhatt 2016). As per the Accenture Global Financial Services 2019, it can be stated that the one in every two consumers wants personalisation banking advices which is based on the personal circumstances. They further look for more analysis which signifies the spending habits and is advised on how to handle the revenue. 

Solutions for TransferWise

Some of the solution that can be derived from is via product diversification and from the external factor of SWOT analysis. Considering the first factor of products diversification it can be analysed that product diversification is a practice of expanding within the original market for a product. Thus, the strategy that is used is to expand its sale associates along with the existing product line within which it can especially be useful for a business that is experiencing stagnant in sale (Stadler et al, 2018). However, Wise can diversify its business from transferring funds from one place to another to instant payment without any additional changes just as PayPal. This is because instant payment is becoming increasingly more within the digital space. On the other hand, there is increase rate of competition over the customers where e-commerce is receiving fierce than and in sometime within the minor deals which drive the customer choices. This can make sure that Wise is one step ahead of the business firm that are dealing with fund transfer as well as charging certain amount of percentage. Lastly, it can also be stated that if the business goes PSP which can transfer credit card processing fee, developer support and reliable customers and individual approach can justify that. 

On the other hand, the other solution that can be implemented by the firm can be analysed with the help of opportunities of SWOT analysis. Wise can adopt the strategy of merger and acquisition where Wise can merger with PayPal and can bring in customers from both market segment (Akram and Shadid 2016). Considering the strategy of merger and acquisition within the business firm Wise can combine its forces in order to create a new and joint organisation. However, acquisition will refer to take over one entity by another, where it can complete to expand the company’s reach and gain marketplace share with a determination to create investor value.

Therefore, the chosen solution that can be implemented can be implemented through Ansoff matrix. However, the matrix implies to four different segments and they are market penetration, product development, diversification and market development (Yin 2016). With reference to the strategy of market penetration, Wise Transfer can increase it rate of production capacity where it can allow the business firm to reach a greater number of end consumers located within the same market. On the other hand, the approach of market penetration can also be facilitated via reducing the operational cost. However, it can implement the strategy by increasing the competitive price and this will help the Wide to increase its sale volume and consumption. Secondly, the strategy of market development can take place through international expansion where Wise still does not exist. Countries like Pakistan, Nepal, Bhutan, Hong Kong and few others has no access to Wise. The organisation can plan to expand their business in this market and at the same time increase their share of market (Suciati, Kurniawan and Iswahyudin 2020). Lastly, Wise can develop in the market by means of merger and acquisition of their business firm along with any same industry that is operating in financial firm.

Potential Issues for TransferWise

Hence, it can be concluded that, Wise is one of the many online platforms in which one can transfer money by earning a reputation from the top-quality services for the next ten years of its existences. As the company profile had landscape in the recent times, the business firm should decide to remain committed towards its execution of the initial vision of assisting the people and therefore by avoiding the excessive bank fees. It should further consider that the corporate clients along with its high-net-worth individuals might be able to gather better rates, this is the situation where the company’s stellar reputation is able to make the default to go and select other options for the customers that are not searching for exchanging its five to six digitally on an annual basis.

The turnover of Wise can be analysed to increase from 9716975 in 2015 to 421000000 in 2021. The reason being that, Wise focused on repeated customers where it tried to gain new segment of target market and had focused on upselling the cross selling od current customers. Thus, this is significant to the factor that it is more effective and cost-efficient as the current customers who are already acquainted with the service Wise is delivering. It is vital for the business to connect with the existing customers as they can excel its way of acquiring the new customer in order to boost sales without any additional overhead.

 Turnover of Wise Payment Limited

Figure 1: Turnover of Wise Payment Limited

Source: Fame Database 

Secondly, the profit margin of 2021 is 9.76% where Wise aimed to earn revenue. In the process of increasing the revenue of the profit the organisation witnessed an increased rate f revenue which streamed and gained more customer, market and the business. On the other hand, the advancement of the technology, the business no longer limited with the physical listing. Hence, listing the place of an online market place, the official webpage of Wise assited to eacg more of customers. 

 Profit Margin of Wise Payment Limited

Figure 2: Profit Margin of Wise Payment Limited

Source: Fame Database 

Lastly, the number of employees had increased from 172 in 2015 to 2243 in 2021 thereby observing an increased rate of employee within the company. This can be identified that the company gives importance to its employees which ultimately led to employee engagement. It is a strategic business objective because the employees lead to a long-term employee retention as well as higher level of productivity and lastly, enhanced quality of work. 

 Incresae number of Wise Payment Limited

Figure 3: Incresae number of Wise Payment Limited

Source: Fame Database

Reference 

Akram, J. and Shadid, M.K., 2016. The Impact of Critical Factors on Mergers and Acquisition in Coverging ICT Industry. Journal of Information Engineering and Application.

Al-Alawi, A.I., 2018. Using balanced scorecard in measuring the performance of online banking: cultivating strategic model map in financial sector-case of Bahrain. Journal of Internet Banking and Commerce, 23(2), pp.1-26.

Bhatt, A. and Bhatt, S., 2016. Factors affecting customer’s adoption of mobile banking services. Journal of Internet Banking and Commerce, 21(1), pp.1-22.

Burnard, K.J. and Bhamra, R., 2019. Challenges for organisational resilience. Continuity & Resilience Review.

Hassan, S.H., 2020. Impacts of implementation of extensive onboarding process on employee retention-a casestudy from transferwise. Master's Thesis. Tallinn University of Technology, Tallinn, Estonia.

Hassan, S.H., 2020. Impacts of implementation of extensive onboarding process on employee retention-a casestudy from transferwise. Master's Thesis. Tallinn University of Technology, Tallinn, Estonia.

Hassani, H., Huang, X. and Silva, E., 2018. Banking with blockchain-ed big data. Journal of Management Analytics, 5(4), pp.256-275.

Khan, A.G., 2016. Electronic commerce: A study on benefits and challenges in an emerging economy. Global Journal of Management and Business Research.

Khan, A.G., 2016. Electronic commerce: A study on benefits and challenges in an emerging economy. Global Journal of Management and Business Research.

Maxwell, A.G., 2018. BUILDING BRAND TRUST WITH ONLINE MARKETING: A CASE STUDY OF TRANSFERWISE. Tallinn University of Technology.

Rom?nova, I., Grima, S., Spiteri, J. and Kudinska, M., 2018. The payment services Directive II and competitiveness: The perspective of European fintech companies. European Research Studies, 21(2), pp.3-22.

Stadler, C., Mayer, M.C., Hautz, J. and Matzler, K., 2018. International and product diversification: Which strategy suits family managers?. Global Strategy Journal, 8(1), pp.184-207.

Suciati, T.R., Kurniawan, D. and Iswahyudin, M.D., 2020. SWOT Analysis and Ansoff Matrix in Creative Food Industry Business Development: A Study on Creative Food Business “Komala”. Open Access Indonesia Journal of Social Sciences, 3(2), pp.69-76.

Ya, S.L., 2020. Prospects and Risks of the Fintech Initiatives in a global banking industry. ???????? ?????????, (1 (43)), pp.275-282.

Yin, N., 2016. Application of AHP-Ansoff matrix analysis in business diversification: The case of Evergrande Group. In MATEC Web of Conferences (Vol. 44, p. 01006). EDP Sciences.

Zukin, S. and Papadantonakis, M., 2017. Hackathons as Co-optation ritual: Socializing workers and institutionalizing innovation in the “new” economy. In Precarious work. Emerald Publishing Limited.

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