TransferWise Strategic Analysis for Dominating the Remittance Services Market
In this detailed strategic analysis by EAST COAST GLOBAL CONSULTING, the focus is on how TransferWise can dominate the remittance services market and achieve a zero-fee target. The analysis covers key issues, objectives, recommendations, challenges, and the international remittance environment. It highlights the emerging blockchain technology, regulatory challenges, and the need to manage liquidity and security risks. The strategy involves developing strategic partnerships with major banks to become a leading low-cost remittance provider.
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Presentation Transcript
TransferWise Here Comes the Boom! EAST COAST GLOBAL CONSULTING
Agenda Challenge Key Issues & Objectives Recommendation Analysis Alternatives Implementation Plan Financials Risks & Mitigations What Success Looks Like Delia Chelsey Allison Jennifer Delia EAST COAST GLOBAL CONSULTING 2
Challenge How can TransferWise dominate remittance services market and approach zero-fee target? EAST COAST GLOBAL CONSULTING 3
Key Issues Emergence of blockchain technology Outflow exceeding inflow Changing regulatory environments Reputational challenges Industry currently dominated by Big Banks EAST COAST GLOBAL CONSULTING 4
Key Objectives Increase client volumes to maximize revenue growth Manage liquidity position Mitigate potential security risks Curate reputation to obtain bigger clients EAST COAST GLOBAL CONSULTING 5
Recommendation Develop strategic partnerships with major banks to become the world s leading low-cost remittance provider EAST COAST GLOBAL CONSULTING 6
Analysis DELIA WARREN
International Remittance Environment THREATS: OPPORTUNITIES: Blockchain disruption threats remittance services industry eliminates fees 30% of financial services to be owned by tech. companies, not banks by 2026; globalization Industry rife with money-laundering, sanction avoidance, and fraud Banks make international currency exchange expensive and cumbersome Space dominated by large scale commercial banks & inexpensive, globally present competitors Avg. remittance fee $US12; avg. remittance amount $US200 migrant populations Peer-to-peer money transfer gaining relevance and trust Lack of trust in online money transfer services Operating in highly complex space with unpredictable future but huge potential EAST COAST GLOBAL CONSULTING 8
TransferWise Internal Analysis STRENGTHS: WEAKNESSES: Powerful investors, world s most successful fintech unicorn Lack of experience Service offering lacks innovation 10% international market share Navigating complex regulatory space high risk Transparent operations, registered compliance teams Reputational damage (false ads, Hawala comparison) Susceptible to data breaches Operating in 50 countries globally Facing liquidity issues Successful partnerships with small, startup banks Must navigate carefully to avoid major scandals and curate reputation to grow business EAST COAST GLOBAL CONSULTING 9
Competitive Environment Remittance Institution Value Proposition Fast, low-fee service Broad service offering (phone, cash pick-up) Target low-value, high-volume remittances (C2C) No fees Target higher-value remittances (C2C, C2B, B2B) Trusted, globally established, secure Western Union/MoneyGram OFX/ World First Banks Value proposition not unique enough to compete with established, low-fee remittance providers Strategic banking partnerships provide access to client volume and improve reputation bigger clients EAST COAST GLOBAL CONSULTING 10
Financial Snapshot JENNIFER BUTTON
Financial Snapshot $ US 151 Million Revenue 78% Revenue Europe 22% Rest of World EAST COAST GLOBAL CONSULTING 12
Remittance Market US$ 574 Billion in Remittances -Competitors 25% of this Business -US$ 430 Billion Available Transfer wise is saving customers US $2.65 M daily Goal of reducing transaction fees to zero (10 years) Need to increase volume of transactions Liquidity issues Currently borne by TransferWise EAST COAST GLOBAL CONSULTING 13
Countries to Target Remittances Inflows & Outflows in Billions $USD Outflows United States Saudi Arabia Switzerland Germany Inflows India China Philippnes Mexico 67 38 26 21 152 $ $ $ $ $ $ $ $ $ $ 63 61 31 29 184 EAST COAST GLOBAL CONSULTING 14
Alternatives CHELSEY KING
Alternatives 1 Integrate Blockchain Technology 2 Strategic Partnership Paypal 3 Remittance Service Provider for Banks EAST COAST GLOBAL CONSULTING 16
Alternative 1: Integrate Blockchain Technology Advantages Hedges against industry disruption Disadvantages Uncertainty around blockchain technology Loss of control over verification process Timeliness of transactions Energy inefficiency; costly Association with money laundering and corruption EAST COAST GLOBAL CONSULTING 17
Alternative 2: Strategic Partnership with Paypal Advantages Opportunity to operate in the ecommerce space Bigger Picture focus and Paypal support Leverage data security competencies Disadvantages Limited to Paypal s reach Departure from peer-to-peer Does not address outflow exceeding inflow EAST COAST GLOBAL CONSULTING 18
Alternative 3: Remittance Service Provider for Banks Advantages Access to liquidity Access to all banking clients including businesses Leverage data security competencies Previous success with smaller banking institutions Reducing the risk of cross-boarder transfer to banks Disadvantages Symbiotic relationship with banks EAST COAST GLOBAL CONSULTING 19
Decision Matrix KeyObjectives Blockchain PayPal Banks Increase client volumes to maximize revenue growth Manage liquidity position Mitigate potential security risks Curate reputation to obtain bigger clients EAST COAST GLOBAL CONSULTING 20
Recommendation Develop strategic partnerships with major banks to become the world s leading low-cost remittance provider EAST COAST GLOBAL CONSULTING 21
Implementation Plan ALLISON PENTON
Implementation Plan Framework for Strategic Bank Partnership Defined Marketing Strategy Target Large Scale Clients Talent Management EAST COAST GLOBAL CONSULTING 23
Timeline Phase 1: 0-12 months Establish strategic partners with big banks Phase 2: 12-18 months Marketing campaign Talent management Continue seeking strategic partners EAST COAST GLOBAL CONSULTING 24
Framework for Bank Partnerships Number of Customers Reputation Volume of Transactions Geographical Footprint EAST COAST GLOBAL CONSULTING 25
Banking Recommendations USA China India Bank of America Royal Bank of India HSBC EAST COAST GLOBAL CONSULTING 26
Benefit of Partnership TransferWise Financial Institutions - Access to more clients Improved liquidity - Reputational advantages Added security features - Increased volume of transactions - Low-risk option - Commission fee - - EAST COAST GLOBAL CONSULTING 27
Marketing Strategy Digital Marketing Campaign Increase SEO and Blog Articles Peer-to-Peer Marketing Campaign Promote Low Transfer Fees EAST COAST GLOBAL CONSULTING 28
Talent Management Software Developers Marketing Leads Sales Lead Cybersecurity Department Data Analysts EAST COAST GLOBAL CONSULTING 29
Enhanced Security Two-factor authentication - Decreases risk of security breaches SMS Verification Code _ _ _ _ _ _ Financial Institution Security - Capitalizing on current security mitigations existing within EAST COAST GLOBAL CONSULTING 30
Financials Risks & Mitigations JENNIFER BUTTON
Financial Analysis Remittances Inflows & Outflows in Billions $USD Capture 50% of the Market Potential Market Outflows Fee 1% 0.34 $ 0.19 $ 0.13 $ 0.11 $ 0.60 $ 0.50% 0.17 $ 0.10 $ 0.07 $ 0.05 $ 0.30 $ 0.30% 0.10 $ 0.06 $ 0.04 $ 0.03 $ 0.18 $ United States Saudi Arabia Switzerland Germany Other $ $ $ $ $ 67 38 26 21 119 $ $ $ $ $ $ $ $ $ $ $ $ $ 34 19 13 11 60 - - Inflows India China Philippnes Mexico Other Total $ $ $ $ $ $ 63 61 31 29 119 574 32 31 16 15 60 287 $ $ $ $ $ 0.32 0.31 0.16 0.15 0.60 $ $ $ $ $ 0.16 0.15 0.08 0.07 0.30 $ $ $ $ $ 0.09 0.09 0.05 0.04 0.18 3 Countries All Countries 0.955 $ 2.870 $ 0.478 $ 1.435 $ 0.287 $ 0.861 $ EAST COAST GLOBAL CONSULTING 32
Where is the money coming from? Funds Required Marketing Campaign Talent Management 10 IT 10 Marketing Total 1,500,000 800,000 700,000 3,000,000 Use existing cash EAST COAST GLOBAL CONSULTING 33
Risks and Mitigations Medium risk Providing opportunity for banks to reduce risks and still make money Lack of buy-in from Big Banks Medium risk Joining banks, not trying to beat them. Improving reputation through partnerships. Competition Low risk Immature technology Customer uncertainty Block Chain Disruption EAST COAST GLOBAL CONSULTING 34
Conclusion DELIA WARREN
What Success Looks Like Increase client volumes and maximize revenue growth Partnership with large scale banking institutions in USA, China and India Leveraging financial position of big banks and building reputation Manage liquidity position Mitigate potential security risks Leveraging bank security protocols Two factor authentication Curate reputation to obtain bigger clients Become world s low-cost remittance provider EAST COAST GLOBAL CONSULTING 36
Questions? THANK YOU!
Contingency Plan Sell company to Paypal - Familiar with business - Capitalize on e-commerce transactions - Mature markets EAST COAST GLOBAL CONSULTING 38
