Strategic Recommendations for TransferWise in the Banking Industry

TransferWise faces the challenge of defending against the Blockchain threat to become the top FX remittance provider globally. Recommendations include creating a Digital Financial Ecosystem named Argent, hiring key executives in Compliance and IT Security, and engaging Consensys Blockchain Consulting. The implementation plan involves analysis and agenda setting to navigate the evolving banking industry landscape.

• TransferWise
• Blockchain threat
• FX remittance
• Digital Financial Ecosystem
• Banking Industry

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1. TransferWise TransferWise A Sustainable Disruptor A Sustainable Disruptor Presented to Mr Mr Kaarmann Kaarmann and and Mr Mr Hinrikus Hinrikus Smurfit Digital Marketing Smurfit Digital Marketing Weiran He Geoff O Brien Monika Ghita David Madigan 1

2. Your challenge Your challenge How must TransferWise TransferWise defend against the Blockchain threat and become the No.1 FX remittance provider globally? 2

3. Our recommendations Our recommendations First Second Create a Digital Financial Ecosystem (named Argent ) Third Hire key C-level executives in Compliance and IT Security Hire Consensys Blockchain Consulting to address Blockchain threat 3

4. Implementation David Madigan Recommendation Monika Ghita Analysis Geoff O Brien AGENDA Weiran He 4

5. Implementation David Madigan Recommendation Monika Ghita Analysis Geoff O Brien ANALYSIS 5

6. Banking Industry Global Outlook Manufacturing Financial Services Manufacturing Financial Services Existing banks retain major complex Existing banks retain major complex financial regulation and risk financial regulation and risk Lending & Deposit Taking Lending & Deposit Taking Existing Incumbent Banks own relationship with Customers ROE 4-5% Customer Facing Financial Services Customer Facing Financial Services Digital Banks Digital Banks Progressive Incumbents Progressive Incumbents Low cost to serve Low cost to serve High Digital capability High Digital capability High Cost to Serve ROE 15-20% Banks are under threat but have a role in future

7. Competitive Analysis January 2019 TransferWise TransferWise Remittance Remittance Companies Companies (e.g. Western (e.g. Western Union) Union) Commercial Commercial Banks Banks Other Digital Other Digital Banks Banks ( (Revolut Revolut, , CurrencyFair CurrencyFair) ) Blockchain Blockchain Price Price Trust Trust Speed Speed Coverage Coverage Convenience Convenience IT Systems IT Systems Good Good Medium Medium Bad Bad TransferWise must continue to build customer volume

8. McKinsey Disruptive Model New New Normal Normal Inevitable Inevitable Detectable Detectable Profit Profit Clear Clear Disruptor Disruptor TransferWise Profit Profit point point Incumbent Incumbent Time Time

9. TransferWise Threats KYC, AML and compliance with International Sanctions Future Development of Blockchain capabilities Reliance on banks to provide liquidity TransferWise well positioned but must address threats

10. TransferWise Financials Historic TransferWise Total Revenue Run rate Operating Costs Total Operating Costs Net income Net margin Employees Revenue/employees Margin/employees Funding Apr-16 Apr-17 Apr-18 151 143 143 $m $m 48 81 97 87 $m (33) -69% 10 10% 8 5% 600 251,667 13,333 $ $ $m 397 TransferWise performing strongly versus Western Union

11. Implementation David Madigan Recommendation Monika Ghita Analysis Geoff O Brien RECOMMENDATION 11

12. Your Questions Feasibility Feasibility Will you, TransferWise, be able to accomplish your mission? Yes Will TransferWise be able to replace incumbent banks in the mainstream remittance market? Yes Will banks remain TransferWise s long-term strategic partners? Yes Will TransferWise create a sustainable business model? Yes (but not alone) Following our recommendations TransferWise will not be disrupted by Blockchain technology 12

13. Alternative strategies 1. Buy/Partner with a Blockchain company Technology is not capable to handle high volume transactions. 2. Create a Digital Financial Ecosystem Partnerships are necessary to create a holistic ecosystem. 3. Partner with Western Union Difficult to attain because WU is a direct competitor. 13

14. Alternative strategies Buy / Partner with a Buy / Partner with a Blockchain Company Blockchain Company Create a Digital Create a Digital Financial Ecosystem Financial Ecosystem Partner with Partner with Western Union Western Union Is it consistent with mission, vision and Is it consistent with mission, vision and values? values? Does it address competitive threat? Does it address competitive threat? Does it help drive increased revenues? Does it help drive increased revenues? Is it an optional customer solution? Is it an optional customer solution? What is the size of the opportunity? What is the size of the opportunity? Good Good Medium Medium Bad Bad Creation of a Digital Financial Ecosystem is the best option for sustainable growth 14

15. Recommendations 1. Create a Digital Financial Ecosystem (called Argent ) Application development ($2.5m development + $1m annually thereafter) Dashboard based app hosted in AWS APIs from partner providers will developed by each partner Partnership negotiations N26, Degiro, Nutmeg, Trussle, FundingCircle, Zopa 2. Hire key C-level executives in Compliance and IT Security Head of Compliance from the NY Fed ($200k + equity) Chief Information & Security Officer from PayPal ($175k + equity) 3. Hire Consensys to address Blockchain threat Consultancy engagement fee ($240k annually) Global Ethereum blockchain expert with offices in New Jersey, Dublin and Hong Kong 15

16. Argent: The Digital Financial Ecosystem TransferWise TransferWise Remittance Remittance PSD2 PSD2 EU Regulation EU Regulation Zopa Zopa P2P lending P2P lending - - SME SME N26 N26 Funding Circle Funding Circle P2P Lending P2P Lending - - Personal Personal Online Bank Online Bank Argent Degiro Degiro Online Trading Online Trading Trussle Trussle Mortgage Broker Mortgage Broker Nutmeg Nutmeg Investment & Investment & Pensions Pensions 16

17. Argent: The Digital Financial Ecosystem N26 Remittance Bank Accounts Current Account Investment & Pension Online Trading P2P Lending Mortgage 17

18. Argent: The Digital Financial Ecosystem My Bank Accounts Current Current Savings Savings Lloyds 1,000 HSBC 2,000 3,000 Barclays 18

19. Argent: The Digital Financial Ecosystem Degiro Online Trading Equities Buy Buy Sell Sell AAPL 1,000 $180 1,000 $181 ETFs JPM 1,000 $30 1,000 $30 Index Funds KO 1,000 $48 1,000 $48 19

20. Implementation David Madigan Recommendation Monika Ghita Analysis Geoff O Brien IMPLEMENTATION 20

21. Implementation Timeline Phase 1 Phase 2 Argent Rollout Partnership agreement Platform Development Platform Rollout Hire CISO and Head of Compliance Personnel Appoint Consensys Acquisition / partnership? Blockchain US Financial Ecosystem Partnership agreement Platform Development Platform Rollout 2022 2022 2021 2021 2019 2019 2020 2020

22. Financial Projections Historic Projections TransferWise Argent Revenue Transferwise Revenue Total Revenue % Market Share Run rate Operating Costs Argent Platform development costs Argent Marketing Costs CISO and Head of Compliance US Platform development costs Total Operating Costs Apr-18 CAGR Apr-19 - 267 267 0.6% 190 3.50 Apr-20 Apr-21 339 837 1,176 2.4% 764 1.00 Apr-22 1,340 1,482 2,822 5.7% 1835 1.00 Apr-23 2,175 2,623 4,798 9.4% 2399 1.00 152 61 473 535 1.1% 267 1.00 $m 151 0.3% 143 77% $m $m $m $m 33% 10 0.6 4 24 0.6 253 94 0.6 0.6 190 463 0.6 143 204 1,043 1,930 2,553 Net income $m 8 63 71 133 892 2,245 Implies a valuation of $13bn based on 6x 2023 Net Income Implies a valuation of $13bn based on 6x 2023 Net Income

23. Risks and contingencies Contingencies Contingencies Risks Risks Explore other options e.g (Trussle -> Habito, Degiro -> Schroders) Difficulty sourcing ecosystem partners 1 Constantly monitoring Blockchain market via Consensus engagement. Options include: Acquisition Blockchain partnership In-house Blockchain development Blockchain advanced quicker than expected 2 Hire a head of compliance from the NY Fed offering competitive salary ($210k), share options and relocation package 3 Additional compliance staff Hire a chief information and security officer from Paypal costing $175k 3 International AML and Compliance Issues 4 Security and System Resilience A variety of risks have been considered with appropriate contingencies A variety of risks have been considered with appropriate contingencies

24. TransferWise TransferWise No.1 FX No.1 FX Remittence Remittence Provider globally Provider globally Smurfit Digital Marketing Smurfit Digital Marketing Weiran He Geoff O Brien Monika Ghita David Madigan 24