EXCLUSIVE: “Getting Wise with the world’s financial data” – Matt Briers, Wise in ‘The Paytech Magazine’

It’s been a landmark year for cross-border payments giant Wise, following a decade of impressive growth. We sat down with Matt Briers, Chief Financial Officer, to discuss the company’s evolution, its recent listing, and what’s coming next

Like many of the world’s most disruptive companies, cross-border payments specialist Wise was born out of frustration with the status quo. Back in 2010, Estonian friends Kristo Käärmann and Taavet Hinrikus shared a common problem. Hinrikus, who was the first employee at Skype, lived in London but got paid in euros. Käärmann worked for Deloitte, also lived in London, and got paid in pounds. But he had a mortgage in euros back in Estonia.

They both moved their money around via their banks, which had expensive fees and bad exchange rates. They knew there had to be a better way. So they put their heads together and worked out a new way to make cross border transactions at the real exchange rate. They would informally transfer money between one another, by looking at the mid-market rate of a certain day each month. This allowed them to achieve a fair exchange rate without paying additional bank charges.

Rapid rise to unicorn

Following this discovery, the pair launched Wise in 2011 under its original name TransferWise. The company has gone on to enjoy a stellar rise, achieving unicorn status and launching an incredibly successful public listing earlier this year. Wise is now one of the world’s fastest-growing tech companies, having raised over $1billion in primary and secondary transactions from some of the world’s leading investors. Currently, some 11 million people and businesses use its services. The Wise account enables users to transfer money internationally at a cheaper rate and allows the to hold money in more than 50 currencies and get real bank details in 10 currencies.

“Today, we move more than £6billion a month,” says Matt Briers, CFO. “We move 40 per cent of that instantly, so it’s available in people’s accounts within 20 seconds, which is quite mind-blowing, and we’re typically the cheapest by quite a stretch, charging around eight-times less than a typical bank.”

Earlier this year, Wise introduced its multi-currency investment feature Assets to UK customers, giving individuals and businesses in the UK the opportunity to choose how their money is held, and potentially earn a return on it, across 50-plus currencies. It chose the first asset to be Stocks, a broad portfolio of 1,557 of the world’s largest public companies included in the MSCI World Equity index, such as Apple, Amazon, and Google, which is collectively worth more than £40trillion. BlackRock provides the tracking fund for the index.

Wise is highly-regarded by its industry peers and commentators alike, thanks to a decade spent building a strong culture of innovation and developing some very talented people. Its ex-employees often go on to create their own companies, with the pan-European investment app Lightyear just one example. It’s something of a trend, with Sifted recently referring to the ‘TransferWise Mafia’. Most significantly for Wise’s prospects, according to a recent McKinsey & Company report, cross-border payments remain a significant growth area.

In 2020, for example, even with travel and trade volumes in decline, cross-border e-commerce transactions grew 17 per cent. Cross-border network provider SWIFT’s volumes were 10 per cent higher in December 2020 than December 2019. Not only has a widely-anticipated ‘re-shoring’ of production chains and related shift in trade flows so far failed to materialise, but increases in non-trade payment flows have more than offset lower transaction volumes in trade, driven by increased volatility in treasury, foreign exchange and securities. And such dynamics are leading to volume growth and record market valuations for payments specialists like Currencycloud (recently acquired by Visa), Banking Circle, and Wise.

A year to celebrate

A year of significant developments for Wise began in January 2021, when it announced a global partnership with Visa to leverage Visa Cloud Connect. This has enabled Wise to further expand its footprint, rolling out its multi-currency debit cards in Asia Pacific, Europe, Latin America and the Caribbean, the Middle East, UK and US. Expanding into new markets would have previously required significant investment in local data centres, telecommunications infrastructure and specialised payment hardware.

But with Visa Cloud Connect, Wise can quickly establish a secure connection to VisaNet through its Cloud provider, eliminating the need for costly local connectivity and speeding up Wise’s ambitious expansion plans. In February, Wise officially adopted its new name, explaining that this reflects what it is building for – a community of people and businesses with multi-currency lives, which includes banks themselves.

“When I first joined, we had four or five people in finance, and most of our financial data was held on a spreadsheet,” explains Briers. “Now, we have billions of rows of data and it’s all controlled in a way that helps us understand exactly where anyone’s money is, at any point in time.

“We’ve now got a team of 100 people in finance, but we also pull on engineers in teams across the whole business. You need people who are really driven and dedicated to building something amazing. Some of the great banks around the world are starting to integrate Wise as well; we’re being plugged in to help run their currency transfer operations.”

With its bullish new identity, in May 2021 Wise tapped into an additional £160million capital facility to refinance existing debt and support its funds flow and ongoing working capital needs. Just two months later, it made global headlines when it took part in the first-ever direct listing of a tech company on the London Stock Exchange, with the company valued at a market capitalisation of £8billion. A direct listing doesn’t involve raising new capital or bringing in new investors as with a formal initial public offering. The price was determined through an extended three-hour opening auction, rather than through a traditional book-building process in which a company’s bankers ask institutional investors, in the days running up to the IPO, to submit bids for shares and the price they’re willing to pay.

“It means that, instead of just institutions being able to invest, anyone who has access to the London Stock Exchange – and now also the New York Stock Exchange because we’ve got an American Depositary Receipt (ADR) listed in New York, too – can. It democratises things and lets our customers invest in our future,” says Briers. “Becoming a public company isn’t easy, and it shouldn’t be because the thresholds and standards that are put on public companies should be high. So, we had a lot of work to do. In fact, it was months of work for a lot of people across the company to help us get to that moment in July.”

Building on smarter foundations

Following Wise’s explosion across the world’s markets, much of its success lies in its ability to manage its plethora of data efficiently, streamlining it to ensure a smooth operation that helps it move fast.

“There are very few global banks in the world,” explains Briers. “Some call themselves global, but they’re not really; they’ve expanded into other markets by buying other banks. If you look under the hood, they have multiple businesses, typically on different accounting systems and ledgers, hindering their ability to operate internationally.

“So, many of these ‘global’ banks are actually just a brand, wrapped around a lot of local banks and different systems that don’t interact well. What we’ve built, at Wise, is one ledger everywhere, so we’ve got one system that understands where anyone’s money is, anywhere in the world, at any point, and we can move that money really quickly. It sounds simple, but it’s actually very hard, and really hard for others to replicate when they’re rooted in multiple local infrastructures. It also means our data is all in one place, and our analytics are phenomenal. We can understand our exact financial position within minutes, and how much money we’re making.”

After a blockbuster year, the logical question is what’s coming next?

“We’re building an aspirational product,” says Briers. ”Whether you want to manage your money better, or your international banking, then Wise is a cool place to do that, and it will get increasingly better in every jurisdiction. Will there be new features? Yes, definitely. But built in a way that just helps people manage their money around the world, in an easier and wiser way. So, no big diversions. We’re not going to the moon yet… but I won’t rule it out!”

This article was published in The Paytech Magazine #10, Page 38-39