What is TransferWise?
Transferwise is a brand new foreign currency transfer service.
What's so great about it?
This is a service that could totally disrupt the market. Say you want to transfer £300 to someone who wants to receive the amount in euros. You make a £300 deposit to TransferWise, it converts it to €359.61 (at the current rate of exchange) and delivers it to the recipient within 1-3 working days, saving you €28.83 on traditional transfer fees. Find out how the founders came up with the idea here.
So it's much cheaper than other options?
Yup. Bank transfers and Western Union both take a cut of £15/£20 on the same cash amount plus a 3-5% commission on the exchange rate. The exchange relies on there being someone at the other end wanting to change the pounds into euros and works with partners to ensure liquidity. TransferWise doesn't have to do this.
How did you hear about it?
There are a raft of finance start-ups looking at banking products trying to figure out ways to make them better and save the consumer money. Funnily enough, the tagline on the TransferWise website actually reads: 'Bye bye banks. You've had your fun!'. I heard about it because one of the founders, Taavet Hinrikus, used to work for Skype so he knows how to make noises in the tech space!
Who is it aimed at?
A full range of currencies is not currently available yet and the service is mostly limited to UK, US and European destinations, which means it's more likely to be used by individuals working abroad who need to transfer money home, international students (or parents, when the students run out of money) and small businesses.
What makes it interesting?
It's a simple and cost-effective solution that improves on the status quo. It's not only cheaper, it's also easier to use for the most part.
What are the challenges?
The product is great but, when it comes to launching a new financial service, establishing trust in the brand/product is key. You need to convince people that it's safe for them to hand over their money, and know that it will arrive safely at the other end. That may involve an expensive marketing strategy, but TransferWise haven't revealed any details about that yet.
Here to stay?
Should do. The potential market space is huge and only a small fraction of it is required for the business to scale quickly. As I said, the marketing challenge will be key.
Would you invest?
If my pockets were deep enough!
Farhad Koodoruth is the founder of digital media agency Blowfish Digital.