As discussed at length in our 2016 Money Transfer Report, in order for international payment startups to break even and reach profitability, new verticals will need to be identified and products will need to be developed to address these needs. While many currency brokers and international payment startups began as an alternative to banks, it increasingly seems that many of them have realized survival will require them to act more like the very thing they advertise against - a bank. Many currency brokers have historically offered banking-type products, such as multi-currency accounts or loans - as we touched on in our interview with Mark Smith-Halvorsen earlier this month.
Currency brokers have long seen the value of helping customers, particularly SMEs, navigate foreign currency risk with a variety of currency risk hedging products, including currency forwards and currency options. However, what is new to the scene is these same products being offered by relative newcomers to the scene - such as World First and Transferwise. Both companies announced in the last month that they will now be offering multi-currency products to their customers, with corporate clients and SMEs especially in mind for these products.
World First and Transferwise Further Compete With Banks
Earlier this month, international payments company World First announced the launch of a new global payments platform that was designed specifically for SMEs.
Many SMEs lament the challenge of attempting to open a multi-currency account for a business of their size. Banks tend to avoid offering complex products, such as multi-currency accounts, to SMEs, as they usually require much hands-on maintenance with little return for the bank. World First's debut of their new multi-currency platform shows their dedication to serving SMEs, and that they understand the value of SMEs and how incorporating them into their offerings can be beneficial to World First. It is interesting to note, that as World First further evolves as a company, they are offering a product that is more along the lines of a banking product, rather than a simple, low fee money transfer.
Transferwise has also recognized the value of SMEs and corporate clients. Though the company made its major mark on the scene due to its dedication to Business-to-Consumer marketing, this week they announced a new Borderless account that will allow customers to hold up to 15+ currencies. Similar to a bank's multi-currency account, Transferwise is providing an alternative to its customers, which include both typical consumers, businesses and SMEs.
Is Behaving Like a Bank a Key to Success?
As payments companies continue to evolve and strive for profitability, will we begin to see more "bank like" behavior? Chances are, this will be necessary in order for companies to thrive and maintain a solid customer base. But how will they do this without abandoning their "not like the banks" principles? Only time will tell.
