(Last of a two-part interview with Kristo Käärmann, co-founder and CEO of TransferWise)
TransferWise, arguably one of the world’s most well-known fintech brands, has expanded its presence to more than 70 countries since its founding in 2011, winning against incumbents and giants in the cross-border payments arena with its competitively priced and convenient money transfer service offerings.
In the first part of an exclusive interview with EJ Insight, Kristo Käärmann, co-founder and CEO of TransferWise, talked about how the firm is making international money transfers instant, convenient, transparent and eventually free, as well as how it continues to grow its money transfer service despite the global turbulence.
In the second part of the interview, Käärmann talked about the strategy of building TransferWise’s global money transfer ecosystem, and his thoughts on Libra, Facebook’s much-hyped cryptocurrency project announced in June this year, which also positions itself to dominate the global remittance market.
Here are excerpts from that interview:
Q: We have seen Transferwise partnering with challenger banks in Europe. While the Hong Kong Monetary Authority has issued licenses for virtual banks in the city, is there any Hong Kong-based virtual bank seeking partnership with Transferwise?
A: TransferWise is open to working with both traditional and virtual banks, both in Hong Kong and in other places. There are a number of banks in the Asia-Pacific region we are currently in active talks with.
Besides Monzo, N26 and Bunq, we have also signed an agreement to integrate with BPCE, the second-largest banking group in France. TransferWise has built the best international rails for cross-border payments in the world. Banks that integrate with the TransferWise infrastructure can help their customers benefit from low transfer fees – up to eight times cheaper than the banks – and our much faster transfer speeds. The better service will help them retain their customers. The cross-border payment industry is undergoing rapid and fundamental change because of innovations by TransferWise and other fintech companies. Banks that keep abreast of this change by availing their customers to the most advanced technology and infrastructure are least likely to be disrupted by the change.
Q: As global social network giant Facebook unveiled its cryptocurrency initiative, Libra, in June, do you think Facebook’s Libra will be an overwhelming player and close competitor to Transferwise in the payments field? Is Transferwise interested in joining the Libra Association to be part of Libra’s payment network?
A: It is too early to say how big an impact Libra will have in the payments space. Libra still has work to do in convincing regulators that it can be implemented in a way that complies with regulations surrounding anti-money laundering, data protection and so on.
Nonetheless, it is good for the financial industry, and for consumers, to have a global player like Facebook working to improve how money moves around the world. It may help with educating regulators, it could help the payments ecosystem evolve faster and eventually lower the cost of moving money. Imagine if regulators have to think about changing policies to allow a non-financial institution like Facebook to be part of local payments rails. I hope the conversations will move faster around local access to payment systems, which is currently still heavily skewed towards banks.
We are engaging with Facebook and the Libra Association. We need to learn more to see if it’s a fit for TransferWise.
Q: Would Transferwise invest or develop its own blockchain-powered solution for its payment services?
A: Not at the moment. We invest in and develop new product features based on what our customers ask for. At the moment, our customers mainly want us to solve their problems surrounding national currencies such as the UK pound and the Hong Kong dollar. They use national currencies to pay for their mortgages, their tuition fees and their meals.
The existing TransferWise infrastructure is able to help deliver their money from one national currency to another national currency in a cheap, fast and convenient way without having to use blockchain technology. And we constantly strive to improve our infrastructure so that we keep raising service standards.
That said, we will monitor blockchain technology and if there is a practical way to use it to solve the real problems that customers have, we are open to exploring its use.
Q: Do you think cryptocurrency will be a killer to cross-border payment services like Transferwise?
A: No. Cross-border payments are a multi-trillion-dollar problem. There are multiple ways to attack the problem and Libra is one approach. Our mission is to build a world where money movement across borders is instant, convenient and eventually free. We are happy to see others share that mission and try to bring that change to the world. And so we see Libra not as a threat but as an opportunity. First, there will never be a single currency in the world. And second, if people need Libra, who is best positioned to change USD to Libra or HKD to Libra?
(Part 1: How Transferwise is taking over the world of remittances)
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