TransferWise has secured additional permissions for a number of investment related activities from the UK Financial Conduct Authority (FCA). This could see them going head to head with Revolut and other “super apps”.
TransferWise launched in 2011 – initially as a platform for lower-cost, more transparent foreign exchange and international currency transfers. In 2018, TransferWise added a multi-currency account and TransferWise debit MasterCard to their offering. The multi-currency account allows customers to hold balances in over 50 currencies. Target customers have included expats, freelancers and travellers. They have also launched TransferWise for Business.
TransferWise now has over 7 million customers and transfers over $5 billion each month. They have 14 offices around the world and employ more than 2,000 people.
TransferWise’s CEO and co-founder, Kristo Käärmann, explained that TransferWise has GBP 2 billion in deposits in TransferWise accounts, and customers have asked them for a way to generate a return on their money. This new investment offering could help customers do that. The company says that this new offering is expected to launch in the next twelve months.
In line with this request from customers to generate a return on their money, the company has said that it will offer “simple, affordable funds from reputable providers”.
Käärmann tells TechCrunch that TransferWise has no plans to get a banking license – he says that in Europe a banking license would only enable them to lend out customers’ deposits – and that is not something they are looking to do.
By adding investment products to their platform (on top of their existing account services and payment services), TransferWise could give customers a compelling alternative to holding their money at digital banks or fintech platforms such as Monzo or Revolut, or a traditional bank like HSBC or Barclays. They have already built a brand that is trusted by a large number of people – demonstrated by the GBP 2 billion of deposits that customers currently hold in TransferWise accounts. By providing customers with the ability to easily and transparently generate returns from low-risk and liquid investment products (perhaps such as some government bond funds), customers may move far more of their total balances to TransferWise’s platform.
The new permissions listed on the FCA’s register for TINV Ltd (a TransferWise subsidiary) include permissions for arranging deals in investments, arranging safeguarding and administration of assets, dealing in investments as an agent, dealing in investments as an agent (as a matched principal broker) and safeguarding and administration of assets (without arranging).