Wise founders Taavet Hinrikus (Left), Kristo Käärmann
As a platform that enables borderless remittance for individuals and businesses, international expansion has always been a crucial element in how Wise operates.
Formerly known as TransferWise, the London-based company aims to solve the problems of high fees and currency mark-ups on foreign exchange transaction by building a platform that provides “instant, convenient, transparent and eventually free” international remittance. Launched in 2011, it has also expanded to include other products such as a companion debit card and a multi-currency account.
According to Venkatesh Saha, Head, Asia-Pacific Expansion at Wise, the company thinks of international expansion in two dimensions: Launching in new markets where there are demands for its services and bringing new features to existing markets.
“Bringing Wise to new markets means getting appropriately licensed since we are a provider of financial services. How do we choose which markets to prioritise? We simply ask our customers – if we do not currently serve a market where they are based, we ask them to come to our website and leave a ‘wish’. The currency route with the highest number of wishers automatically moves to the top of the list,” he explains in an email to e27.
In the Asia Pacific, where Wise leads its expansion from its hub office in Singapore, the company has launched remittance product in Malaysia, Hong Kong and Indonesia, as well as new features (such as the account and debit card) in Singapore, Australia, New Zealand and Japan. It also has a number of corporate and SME clients using its services, including their infrastructure Wise Platform.
In this edition of deep dive series, Saha reveals how the company is creating its international expansion plan, the challenges that it has faced along the way, and what lessons can be learned from it.
You will learn about:
– International expansion 101: Key principles and steps
– On working with regulators
– Final thoughts on international expansion
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International expansion 101: Key principles and steps
Before a company can plan their international expansion, first and foremost, they need to find out where the demands are. The only way to do this is by listening closely to what the customers want.
“We continually review where our customer demand is the highest and focus on those markets. For example, sending money from Indonesia and Malaysia had been our top most-requested currency routes in the region and we were excited to launch international money transfers for these customers,” Saha says.
The next step is figuring out the customers’ local needs, a process that is especially crucial in an incredibly diverse market such as Southeast Asia. While Wise’s user experience and brand identity remain “largely the same” in all of its markets, there are some adjustments that the company had to make.
“Taking on this local lens has allowed us to communicate, address and develop locally-relevant solutions that make a real impact on customers’ lives. Making the service available in Bahasa Indonesia to cater to our customers in Indonesia, integrating with MyInfo in Singapore to offer a seamless digital onboarding experience or providing access to POLi, a popular way to fund remittances in Australia, are some examples of tailored services in APAC,” Saha elaborates.
“Building locally-relevant solutions is a significant investment that involves multiple teams from product, expansion and engineering to operations, and even design and marketing,” he stresses.
Once these steps are covered, the next step that Wise takes is customer education. Interestingly, according to Saha, many of their customers are not even aware that they are not well-served when it comes to foreign exchange.
“Too often, fees are hidden and non-transparent when it comes to transaction fees or exchange rate markups. How this works: providers will offer a relatively low or zero upfront transaction fee, but mark up the exchange rate instead, which means customers pay more than they should due to the unfriendly rate whether it’s transferring money abroad, making international payments or changing money from one currency to another,” he explains.
This is the part where product marketing teams will play a crucial role.
“One example of how we do this is by offering a comparison with other leading players in a given market on our home page. This way, consumers can see for themselves how much our service costs compared to other players and choose wisely — if a competitor has a better deal, we don’t hide it,” Saha says.
One thing that must never be ignored when launching a product or service in a new market is the evaluation process. According to Saha, having a company culture that celebrates success and failure in equal measure is a “privilege” that aids the process.
“Our products are not static — even after a successful launch, we are constantly trying to improve the product and the customer journey. For instance: Can we drop prices even lower? Can we make customer onboarding more seamless? Can we make the payments move faster? We set these KPIs well before launch and measure our progress towards them every quarter,” Saha says.
“If we identify a misstep, the team that worked on that project gets together, does a retrospective of what happened and then shares their learnings with the entire company. An example could be if we missed a launch deadline or if we underestimated local regulatory complexity. This allows other teams to learn from the experience and helps them apply these learnings to other contexts.”
On working with regulators
For fintech startups, part of the challenge in introducing its products is making sure that it is able to make a difference in customers’ life –while being compliant with regulation. The challenge gets more complicated when they are introducing the product into a new market.
Saha gives an example by comparing the European and Southeast Asian markets. In Europe, a single license can be used across multiple countries, but in Southeast Asia, each country has their own requirements that companies must fulfil.
“As part of our commitment to new markets, we often open local offices to lay the groundwork and drive growth. Hiring and onboarding new team members who will be responsible for launching and building on the initial momentum is not easy. We have to ensure that we find colleagues who understand our mission, serve as the bridge to the local regulators and ecosystem and can be advocates for Wise in their respective markets,” he says.
For Wise, the key in working with regulators is openness while keeping in mind that the regulators’ job is to keep their citizens’ money safe.
“… takes time and multiple conversations before they can build that trust and get comfortable, especially if it is an innovative business model like ours. As one regulator told me after a multi-year licensing process, ‘This is a marriage, we will supervise you for as long as you offer services in our country’!” Saha points out.
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It is also important to see this relationship-building as an ongoing process that does not stop with the licensing.
“We see these relationships as an ongoing process where we continue having open conversations with regulators to make our product faster, cheaper and more convenient for customers. For example, when we first launched in Singapore in 2016, all our customers needed to come to our office in person for verification. Having stayed and continued to build in the market over the past few years and working with the regulator, we were eventually able to offer an instant onboarding experience to our customers in Singapore, through our direct integration with MyInfo, the national database,” Saha stresses.
A final thought on international expansion
After laying down the principles and steps that Wise takes to execute its international expansion, we drive the conversation into understanding the common mistakes that business makes when planning theirs –and what Wise has learned about it.
Saha believes that international expansion should be seen as a marathon instead of a sprint.
“Every business wants to grow, launch new markets and get its product into the hands of new customers as quickly as possible, but this should never come at the expense of business sustainability. As such, we are disciplined about where and what we’re spending on, and its impact on the mission which includes making the hard decisions on which country to go to next,” he says.
For Wise, they implement a principle of zero cross-subsidisation in supporting their international expansion.
“We don’t want customers from one country to be cross-subsidising customers in another or have one product cross-subsidising another. This is not only unfair to your customers but it’s also dangerous 一 what if one day customers stop using that ‘money maker’ product? Your entire business could unravel. For these reasons, we want to ensure that each product, feature and market stands alone as sustainable. In order to do so, we spend that extra bit of time to understand each regulator and market’s concerns as well as explore ways to lower our costs before we are comfortable launching publicly,” Saha explains.
In short, the lessons in international expansion can be divided into three parts:
1. Being laser-focused on the mission
“In a fast-paced environment and industry like ours, it can be tricky deciding what to prioritise when everything feels important. Here, our mission charts the course for us and combining this with the need for long term business sustainability has made us more aware of what we’re spending, where, and why we’re doing it. If something doesn’t serve the mission, no matter how shiny, it’s gone.”
2. Having a strong local market knowledge
“When you’re committed to expansion, it’s equally important to have a physical presence in the market or be as close to the market as possible. This enables us to work smoothly with local partners and regulators.”
3. Attracting and retaining the right talent
“This means that beyond having the ability to do the job, we look for people who are passionate about learning new things, and truly enthusiastic about making a difference for our customers and on our mission. Once we find them, the onus is on us to onboard them and give them the tools to be successful at Wise.”
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Image Credit: Wise
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