[SINGAPORE] Wise has always focused on building payment infrastructure that makes international transactions cheaper and faster. And co-founder and chief executive officer Kristo Kaarmann believes the fintech company is now winning over more banks as new clients as its technological expertise to enhance cross-border payments has been recognised as a complement to existing banking services.
“Rather than competing with banks, we see ourselves as a collaborator (with) banks,” Kaarmann told The Business Times.
Many traditional banks, he said, have limited tech capabilities, and need to focus on domestic banking. On the other hand, Wise, as a payment-infrastructure builder with more than 800 engineers globally, creates value in international banking.
Wise now serves over nine million users, up 20 per cent from the year before, according to its latest trading update for the quarter ended Dec 31, 2024. Its cross-border volumes grew 24 per cent to £37.8 billion (S$65.2 billion).
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Meanwhile, its account balances increased by 26 per cent to £16.2 billion.
The growth is accompanied by the London-listed company’s push for cheaper and faster multi-currency transactions. It continues to lower unit costs for customers; cross-border take rate – the percentage of fees retained from transactions – was reduced by between 11 and 56 basis points in the quarter.
Shrawan Saraogi, head of expansion for Asia-Pacific (Apac) and country manager for Singapore at Wise, noted that the company is enabling immediate transactions with direct connections to countries’ payment systems without intermediaries.
Currently, it holds more than 65 licences and six direct connections to local payment systems, allowing about 65 per cent of all Wise transactions to be completed within 20 seconds.
Amid its expansion in Apac, the company was granted access to domestic payment systems in Japan and the Philippines in the second half of 2024.
Singapore as a hub
Since Wise’s entry into Singapore in 2016, the fintech firm has firmly established its presence with about 500 employees based in the Republic.
“Singapore is our hub for Asia-Pacific,” said Kaarmann, highlighting that Apac is a major growth-driver for Wise, accounting for 20.5 per cent of its global revenue in the financial year ended Mar 31, 2024, with a 33.7 per cent year-on-year expansion.
The Singapore market is also a fast-growing one for the company. About £340 million was held in personal and business accounts in the Republic in FY2024. Active customer base in the country grew by 30 per cent on the year, and cards issued to Singapore customers increased 31 per cent in the same period.
Kaarmann expects that demand for cross-border transactions at cheaper rates will continue to grow. “We are working hard to satisfy that demand… making Wise even cheaper.”
The company uses the mid-market rate, the midpoint between the buy and sell rates on global currency markets, for transactions to more than 160 countries.
Kaarmann added that Wise continues to improve its customer service in a fundamental way, by building direct connections with local payment systems and reducing transaction costs each quarter.
Push for transaction transparency
Kaarmann noted that an underlying issue with cross-border wire transactions is the lack of pricing transparency as banks do not indicate the mark-ups in the indicated exchange rate.
While Europe has implemented regulations to ensure that financial service providers inform a customer of the estimated charges for the currency-conversion services prior to the initiation of the payment transaction, Singapore has yet to have such measures in place.
A recent survey by Wise showed that a majority of Singaporeans are unaware of hidden currency-conversion fees, estimated to be S$590 million in 2023, buried in undeclared exchange-rate mark-ups.
Kaarmann sees this issue as an area where potential regulations could push the financial institutions in Singapore to compete and improve upon.
“If everyone says that the fee is zero, then there’s nothing to compete on… the actual hidden fees are going to remain high. So the other benefit of transparency is it increases competition, and it actually makes the bank stronger,” he added.
