You Can't Beat Wise on FX. So Now You Partner With Them | Samarth Bansal, General Manager at Wise Platform

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Picture === Samarth: We are committed to ensuring that in cross border payments we're solving the problems in a way that are very fundamental. So we are in it for the long run. We are investing I think in the next few years $2 billion into just our infrastructure. We are going into details where, there is some efficiency gains that we can get by just working with data, working with regulators.

So we are always, always going to be solving problems on the cross border And that gives us a competitive advantage, which means that you can as the CPO of a Neobank, as a FinTech, not worry about cross border payments. We take that off your plate Monica: hi, Samarth. It's an absolute pleasure being here in Money 20/20 speaking with you guys, with you . Samarth: Monica, I have been waiting for this.

I'm super excited, but also you stole my line. It is an absolute privilege to be sharing the same podcast that you are hosting. Monica: Thank you. And of course, Wise doesn't need an introduction.

I started my career in fintech as we know it today around 2014, '15 in the UK when the fintechs were just getting started and Wise was already there. So Wise is one of the first pioneer fintechs that we have in the industry. And over the years, whether that's in the UK or in Southeast Asia, I go to meetings, I meet people, and everybody at some point says, "But how do we beat Wise?" And I'm like, "We cannot beat Wise."

I'm like, and many times that's been my mandate yeah. "How do we beat Wise?" I'm like, "No, we cannot" right. "We just cannot have better effects than Wise" yeah.

So that's the topic that we want to explore today, that it's like if you cannot beat Wise on effects, well, let's partner with Wise now, which is cool yeah. Right? So I want to start with everybody wants to beat Wise on FX. You started as a consumer play.

How did this shift happen? Samarth: Sure. I can spend some time on that, but the one thing I do wanna call out is, Monica, it warms my heart. It really, words coming, you acknowledging that it's hard to do and solve the problems that we have solved is incredible because you've been an operator, you've been building- Yeah in this space, and you face a lot of the hard challenges that we face as well.

Right? Yeah. So incredible. Thank you for that.

Monica: Thank you. Samarth: Maybe, to- to just take a step back on, I'll try and break this down into two parts, right? One is, what have we done differently? So what is Wise doing that makes us so competitive on the FX side, and why so many fintechs want to try and replicate or are trying to find the same answer?

And then the second piece is how we've gone from consumer to now starting to partner and power a lot of these infrastructures so on the first one, maybe the... I wish I could tell you we have some secret sauce. We don't, right? It is just purely just going really deep in details and understanding what drives cost for businesses.

And how do we help build this efficiency and reduce our cost base? So fintechs - We've had numerous cases where some of these, in order to build volume, will charge slightly lower, will start, giving offers and discounts to their customers. But where it starts getting real is to try and do this for 12 months, for a year, or for two years, or three years. Yes.

This is the hard thing. Monica: Yes. Samarth: And what has enabled us to do this is, one, we set the why very clearly. So we set the why as saying we want to keep dropping prices.

And the only way you can keep dropping prices is by keep reducing your costs, right? By, by building more efficiencies. So our teams, any team that you work with at Wise is obsessed with looking at data and understanding what is driving each bit, each cent of- Nice ... cost that goes into our pricing to our customers, to businesses, and to platform partners.

And once we understand what drives these costs, the teams then go and try and find solutions to reduce this cost, and this is what has enabled us to drop prices and give this back to customers. And a big important factor there is just the investment that we made in our infrastructure. So the quality of our infrastructure, is, I think I'm very proud of saying very few have replicated that. Yes.

That is because it is a combination of, one, going direct into the local payment solutions. And second, we spend a lot of time in optimizing our treasury FX forecasting, as well as looking at what is causing customer contact. Something as simple as where is my money or when will it reach means there's a customer contact that we would get, which means someone on our customer servicing team has to respond to that. And the more we can give this ROI back to our customers, the more we can give the certainty and consistency to our customers, we reduce that customer contact, which allows us to drop prices.

So it, it is a lot of hard things that we just focus and keep our heads down . Monica: Now that you say customers and call center, I will go off script 100%. Don't have to answer it if you don't want to. So I'm a Wise customer since many years ago.

Yeah. And once in a while, I do my monthly transactions- Yeah ... 'cause I do a few, and then I get a- an email that says, "Hey, Monica. Here's," I don't know, like, "$5 back," or something back.

And I'm always, like, coming up with all these hypotheses on why could have you given me extra money. May- I'm like, sometimes I'm like, oh, it's a loyalty program. Then I'm like, because I'm a regular customer. Then I'm like, no, the FX, there was some savings from the time that I did the transaction to the time that they, they sent the money, therefore they are passing the money to me.

But then I never have an answer. Yeah. So it's like, what's happening there? Samarth: The answer is we're just becoming more efficient, and so the more efficient- Oh ...

we, uh, we end up dropping prices for customers, and there are ways in which we give this price drop back to customers, right? It could be post the transaction. It could be basis the customers that you've helped refer, hopefully bringing customers on board to Wise with. As well as just price drops that we do.

So One thing that as a consumer I love about Wise is, I don't know if you've seen these emails when we do price drops. We actually send you an email that says how much you will end up saving based on your previous transactions because of those price drops. Monica: I love the user experience in the you know what? Now that you say that, I send money every month.

Yeah. I don't look at the FX rate- Right ... because I don't remember. Because the amount that I send is fixed.

Yeah. So I'm like, what's the amount that I had to send- Yeah previous month versus this month? I'm like, yes. Yeah.

It's cheaper. Send it now. But yeah, that experience is- Yeah ... it's what makes a big difference.

So what was going on through the leadership's team mind when you decided, we've seen enough use cases where banks are basically referring customers to download Wise, it's time to take this as exploration, and then go and build Wise platform? Samarth: Sure. Do you like stories? Monica: Yes.

Okay. Come. Samarth: So maybe I'll start with, how we chanced upon this, and then completely honestly and transparently, this is something that we weren't planning for. We saw something change, and then this was an outcome of what we saw change.

Cool. I'll tell you how this happened, right? For a week or so, we suddenly saw an influx of a lot of Hungarian customers. So we saw a lot of customers from Hungary- Start to use on board and like transact, on Wise.

And, our product managers are teams that are responsible for Hungary. They're like, "What have we changed? Did we do anything differently that's suddenly given us this growth?" And we realized by speaking with customers that there was a bank, that was the tellers of the bank were actually referring their customers to not do the transaction, not send money through the bank, but to download the app and to send it through Wise.

So these are bank employees who are telling customers that are walking into their branch to do a remittance and saying, "Guys- Mm-hmm ... it is just better for you to download Wise." Some of them helped them through the KYC and got them to do transfers. So this was what we saw, and I think the beauty lies in what we did afterwards.

So what we did after this was we went and spoke with the bank tellers to understand why are they doing this. So it started off by saying, one, the experience is better. But second, it also made their lives a lot easier, right? Because in traditional infrastructure, the number of customers that would come into the branch two days after having sent the money saying, "The recipient's not got the money.

Where is my money? Why was X, Y, Z amount deducted?" Is the teller has to now answer these questions. And most of the times they'll say, "I don't know."

Exactly. So in a small country like Hungary, that matters quite a lot. And then the second thing was by us embedding our infrastructure in banks, it made it a lot easier for these customers to access the same benefits without having to download a new app, without having to do KYC, et cetera. It was within the banks that they were doing their finances with that they could now offer cross-border remittances.

So we found this proposition quite powerful in saying we understand there's something's broken in the traditional correspondent model, and, bank employees want to solve that. And then second, if we are able to solve it by embedding ourselves in the bank, we make it better for customers around the world. So those were the two, I guess, guiding principles that led to Wise platform. And fast-forward to today, we have, banks like Standard Chartered, Mandiri, Morgan Stanley that are using the infrastructure.

It's evolved and they've become, they've grown by leaps and bounds in the infrastructure, but that core principle remains the same. We want to be where customers access their finances, and they tend to be banks, large online platforms, and we are embedding ourselves there. Monica: Yes. And it's a beautiful growth strategy as well because we know acquiring consumer customers- Right ...

it's mega expensive. So now you go where the customers are. And that's it. So more like changing to your customers, the fintechs.

Usually as a fintech, if we offer remittance a service, we are integrated with a partner. Yeah. In this case, let's say Wise platform, right? But many of us already have existing relationships.

Many of us have an orchestration layer that sends whomever gives me the cheapest. Then let's say as a CPO, why would I go and say, if I already have my two or three partners, why should I add Wise platform? Right. Samarth: So I think you're right, and maybe what the one thing that I'll start by saying is over the last two, three years, we've find ourselves in this sea of sameness.

Everyone sort of looks like the same thing, is talking about the same stuff. But I think payments is one of those things where the details really, really matter. Yeah. You cannot just make general statements.

You need to be very, very specific, and I think this is where we stand out. So you can name the currency corridor, you can name the recipient bank, and we would be able to tell you X percentage of these transfers reached instantly, which we measure as less than 20 seconds. Monica: Yeah. Samarth: We have success rates of Y percent on this currency corridor, and the top three drivers of failures are one, two, three, four things, and this is how we can solve it.

So we are... We go into a lot of detail in being able to benchmark whether or not our product is doing well and keep investing and iterating on it, right? So that I think is one where we get very specific as opposed to talking about just generalizations Monica: yeah. And as I hear you speak, I'm like, obviously, that's the, that's the Wise principle.

Right. You know? Like if... And I'm assuming you're doing it, like the consumer product is so good.

Yeah. It's, to me, it's just like the best. Yeah. That's it.

But then if we use the principles that Wise has used to make the best consumer product, but we apply the same principles in B2B, then it's just a matter of time that you win everybody's business, and you're the best as well. Samarth: I think this is what's driven a lot of our partnerships, right? So if I was to bucket them, you have one type of partners, which are generally the neobanks, the fintechs who are trying to acquire customers. Monica: Yeah.

Samarth: And they want to lead by having a partner that can give them coverage, that can help reduce their operational cost, but more importantly, help them acquire customers from the incumbents. And, Flip, MOX, ZA Bank, all of these are great examples of where they integrated with us, and we helped them from day one get global with, a very high customer NPS score, acquisition score, et cetera. On the other side, you have incumbents who end up wanting to retain these bank customers, right?

So, Mandiri is a great example of this, which during COVID, their entire offline network was obviously couldn't function for cross-border remittances, and so they wanted to do 24/7 digital remittances, and we've enabled them to do this. And they were the first bank to go transparent, and they've managed to therefore retain a lot of their customers. And, I think if my memory serves me right, we're... The remittance feature is the top five feature used within their digital banking app.

Can you imagine that? Like remittance being a top five feature that their customers come over and over again. Per month. It's retention.

Yeah. The moment a bank is able to retain that customer, you can do so much more with them, right? The lifetime value of that customer is so much more than just the remittance Monica: yeah. Samarth: So we see these two things, and I think more broadly, I've been reflecting on this as we've scaled with our partners and spoken with a lot of partners very transparently, and I think it boils down to one thing.

We are committed to ensuring that in cross border payments, we're solving the problems in a way that are very fundamental. So we are in it for the long run. We are investing, I think, in the next few years, $2 billion into just our infrastructure. We are going into details where I think, there is some efficiency gains that we can get by just working with data, working with regulators.

So we are always, always going to be solving problems on the cross border Yeah. And that gives us a competitive advantage, which means that you can, as the CPO of a neobank, as a fintech, not worry about cross border payments. We take that off your plate so that would be my pitch. I, I know you don't need to be sold to, but that's my pitch.

Monica: No, but that is like I don't need to be sold to as a consumer. Yeah. But as a CPO, I'm like, "Yeah, why, why should I... We should have put my resource to do this," you know?

But it's like, but it's a really good pitch. Like what you said at the end, I'm like, "Sounds good." I'm like, "Tell me more." It sounds good.

So I want to change topics because then it's like I want to talk about the region, APAC. Yeah. Yeah. APAC is 20% of Wise's, Wise platform, right?

Of all of Wise. Of, of, of all of Wise. Yeah. Cool.

Oh, that's many questions. What, what makes you choose... Because market expansion is hard. Yeah.

What makes you prioritize one market over the other? Samarth: I won't offend markets, but no. Jokes aside, I think for us we... If you think of, there are two types of essentially customers that we look at, right?

So we have the retail or business customers that come directly to Wise, want us to open up a new currency corridor, offer a new feature, and we get a lot of this feedback directly. So customers, when they're filling out their NDS forms, will tell us very specific things, "I want you to open this currency corridor." Monica: Oh, okay. Samarth: And our product managers or analysts essentially go through all of this feedback and come back with where are our customers wanting us to go, right?

And so we then look at the longer-term view is we want to be in all the markets. We wanna be present everywhere. But there's a lot of time and investment so we then prioritize based on customer demand. So that's what we do on the consumer or the direct-to-customer side.

On the platform side, we look for partners that are thinking of cross-border remittances in a very similar manner to us, right? So if there are very clear pain points that they have, if they want to go from offline to 24/7 digital, if they want the efficiencies of one currency corridor to another, we find ourselves in a privileged position where we are sort of marketing right? So two days back, we launched, the largest bank in South Africa. Cool ...

uh, and we managed to launch this with the largest bank, with 25 million customers. Monica: Congrats. Samarth: Yeah. And, we launched in Philippines with GoTyme , Malaysia MBSB .

Yeah. But our initial traditional bank, the first traditional bank we launched was in South Korea, with Shinhan, right? So we're going to partners where we see that there are, there is value we can add, and there is a very strong alignment in how they think of cross-border remittances and how we're building the space. Monica: So then coming back to...

Because now that we understand, like, how you prioritize markets, then, like, what is making APAC different to, let's say, Europe, or even LATAM, because LATAM is also booming. Yeah. Samarth: I would say between Europe and LATAM, APAC is a lot similar to LATAM. Monica: Yes.

Samarth: And I think the main things that I see, which is driving, I think we're growing, 22% rapidly year on year in APAC. The main thing that I'd probably try and call out is there are three things that we look at. One is consumers and businesses in APAC generally are very intertwined between markets. There's a lot of cross-border movement of people, like Malaysia-Singapore border a lot of movement of services, trades, et cetera, which means money needs to move cross-border.

So in general, there's a lot of cross-border activity that ends up happening in this region. The second thing is a lot of these consumers and businesses are now used to instant. right? So they do this domestic payments are instant.

They start expecting that across border payments. Whereas in some other markets, this is not today the norm. There is still some friction. There's D plus one or whatever.

There is friction in you sending domestic payments. And third is, a lot of the population here is very digitally- Yes and this is, extremely strong tailwind for the growth of the business. I think these three coming together is one of the reasons why I'm very excited about the growth that we have ahead of us in APAC, and also the growth that we managed to get so far. Monica: Yeah.

And then just to add to APAC, APAC has these instant payment rails that we may not see in other parts of the world, uh, PayNet, PromptPay. How much are you... How do they fit in your ecosystem? Samarth: Yeah, that's a great question.

So, the way that I would think of this is at the base they form the payment rails for us. So the plumbing that we use, for getting to instant, but there's a lot more that we need to do on top of it. So if you break down a payment that you're sending from UK to Singapore, you need to ensure that there's instant payment for you to get the money in UK, and you have to do the compliances instantly. You need to do the FX to manage that risk.

So we do work and build on the innovation that we see in the instant payment rails in all of these markets. And we do that in two ways. One is we get direct access to these rails. Mm-hmm.

We just recently announced Japan. Monica: Nice. Samarth: And getting access to instant payment rails, which then improves our infrastructure by, leaps and bounds. And then the second thing that we do is we work with partners to help build redundancy Monica: cool.

And then if we, we go back, like, 10 minutes in the conversation, you said roughly, 75% of the transactions arrive in less than 20 seconds. So you've been talking about efficiency. That's more, from cost and operations is the other. But, like, how do you keep improving speed?

Samarth: That's a mystery to me as well. Monica: I'm like, I'm like, how? I Samarth: genuinely get very amazed by when we see that we've gone from... I remember when I first, joined TransferWise, I think it was a few years back, and 75% and to where we were then is incredible.

We've just moved in one way, right? We keep making transfers faster. And I'm an engineer by my undergrad degree, so I try and take problems and break it down into these small buckets, right? Yeah.

Monica: Me too. If you take Samarth: a transaction from point A to point B and you've crafted out every step that needs to be done, we try and make these steps be done more efficiently and in parallel, right? So think of compliances. We invest very, very heavily in technology to be able to run compliance checks in fractions of a second, right?

We then, have to solve for FX. So, the thing about instant payments is you need to have money in that market even before you need the money. So I need to know that a lot of my customers from Singapore at the end of a quarter are going to send X million dollars into Malaysia. I need to know that so that I can keep MYR liquidity to be able to do that payout.

For that, I need to invest very heavily in forecasting and knowing how much liquidity needs will be there in those markets. So that's one big area that our treasury and treasury ops teams are focused on ensuring that we are, not slowing down payments because of liquidity, right? And then the third piece is on access to payment rails. So we need to get as much direct access as we can on instant payment rails because then we can, create the payment but also fulfill the payment in the receipt print in the receiving country just directly on the infrastructure.

So very broadly, that's how we've managed to go from X percentage to the 75% that you see today. Monica: Yeah. And then curiosity question as well. Like, you, you said it takes, X seconds or microseconds.

So I'm assuming while many people in the industry are trying to automate and using AI, like Wise is like to have, you know, like many things must be automated and using AI right now. So what is your take in, What are you guys doing in change of ways of working to make everything even more efficient? I'm like, oh my God, if it's already efficient and then they are going to add AI, they'll go even more efficient, or you already have AI embedded everywhere and then it's marginal games, I think we'll Samarth: probably be on somewhere on that spectrum, right?

Yeah. So have we embedded AI in every workflow? No. And I think that is also by design because it is a new technology.

It is hardening, and we want to be cautious of where we deploy it and what, efficiencies we get from it. I think the main thing that, it becomes harder, right? So finding these inefficiencies, to your point, becomes harder, but the technology keeps pace. So we try and keep seeing new ways in which we can solve this.

It could be an engineering problem. It could be how you're architected your infrastructure. It could be using AI. It could be just creating simple workflows.

There are multiple ways in which we can continue building this efficiency. I think the biggest uplift is going to be when more and more instant payment rails, allow for fintechs, banks, non-banks to get direct access. I think that's gonna be the step change. That is going to move the needle quite, quite a lot.

Monica: Okay. So as we are reaching towards the end- Yeah ... you- Already Samarth: this has been, uh- Monica: I know. I know, I know.

It's like sometimes I'm like, "Oh, I could keep going for 20 hours here." Yeah, because, you know, like my favorite part in the podcast is always the leadership and the founder's journey, and this is the other that we're not covering today, so that has to be another day. But anyways, so in the past you've said APAC will redefine how we do international payments, cross-border, uh, remittances globally within three years. What...

One is like, why? Two, what needs to happen for that to be true? Samarth: Yeah. I think, um...

And we had already seen this, right? So we see the number of conversations outside of APAC where we walk into these conversations and we say, "Hey, you know what? You can send money from your currency corridor to some other currency corridor instant, in less than 20 seconds." And they're like, "Wait, I thought instant was always two hours or three hours and doesn't work on 24/7 and cannot be done on weekends," right?

And that's just... And if you went to someone in APAC, they'd be, "Yeah." Right. So we are already influencing whether those are regulators, whether those are partners, whether those are- Mm-hmm ...

consumers across the rest of the world in understanding what instant payments can mean and look like. And not just instant, instant and low cost, right? So, like, this is something that, I, I think I have a small role to play, but in APAC I'm very proud, right? Like that we have, set the standards and continue setting the standards for what instant cross-border pay- instant payments and low cost payments would look like.

I think what needs to change is two things. One is, I, I think a lot of large partners today think of cross-border payments as just something that works, right? Like, they haven't gotten into the details to really understand what is the impact, how many customers have left them because they were suddenly charged a fee that they had no idea about. How many customers have left them because there's a...

they couldn't trace where the funds went, right? Like, there are a bunch of these things which it's getting better. More and more banks and large platforms are recognizing that cross-border money movement is no longer just a- A feature that they can create something and forget. They need to continuously invest and understand and go deep and understanding what are the use and their costs.

So I- I've started seeing the amount of conversations that I walk in, and they've already got the data on saying, "You know what? My failure rates- Yeah ... on cross-border payments is X, Y, Z. I'm seeing this kind of, failures come up.

Is this something Wise can solve?" And that's a brilliant starting point, right? Like, it, it goes beyond just, "Yes, I think I need to do something cross-border payments," right? They've gone, they've looked at the data, they understand what is going on.

So that's one. The second thing I think that, will accelerate this, and we've already seen, this, is just more and more domestic payment schemes, becoming instant and opening up access to more and more layers. I think those are the two things that we've well on our way. So I do think we're already, the beacon or the shining beacon that other- Yeah ...

markets are looking and saying, "Oh, yeah, you guys can do this. Zero cost. It's incredible." So I think we have already started to set the standards for this, but we can do this better.

Monica: Amazing. Samar, it's been an amazing conversation, but I want to summarize. So we say, okay, basically Wise is efficiency play. Yes.

That's it. Domestic rails. Right. APAC market.

Boom. Winning combination. Yeah. That's it.

It's like, that's it. The hard bit is, like, how do you leverage... Wise is a very large company, so it's like how do you leverage the capabilities, the infrastructure, the relationships, the knowhow, all those details. The devil is in the details.

It's how it all comes together, and that makes Wise special. Samarth: We - And I think maybe the one point I'd say is that, uh, if you put in that effort at the time, like, you can get that infrastructure as well. It's just a question of how much time and effort and investment being made and continue making that has gotten us here. We can do this with the technology that exists.

Yes. Monica: Cool. Amazing. So everyone, now you have the answer to how Wise operates.

Thank you so much. It's been a pleasure.