Transferwise: Disrupt or disrupted? Asper Consulting Group Emily Sanders Matt Borgford Tanis Brako Carlos Kan Presenting to: Mr. Kristo Kaarmann & Taavet Hinrikus, Co-founders

How does TransferWise scale it’s business sustainably into the future? Key Issue How does TransferWise scale it’s business sustainably into the future?

Core Challenges Business Model Reliant partnerships Scalability Internal Capability Financial Security Unbalanced liquidity Unsustainable acquisition cost Reputation Recent glitch Comparative advertising

Innovate business model through advertising revenue & new technology Recommendation Innovate business model through advertising revenue & new technology

Financial, profitability Strategic Objectives Zero Fees Sustainability Create Brand Excitement Achieve within 10 years Financial, profitability Increase user base

Transferwise Price Trust Speed Coverage Convenience “ ” Delight users and eliminate inefficiencies in the existing money transfer ecosystem.

Core Competencies Cost Effective transferring of funds across international borders Financial Technology TransferWise needs to leverage core competencies to fuel growth

Revenue and profitability 78% of revenue from Europe Profitability %

Transferwise Environment Competition Partnerships Western Union Market leader in money remittance services by revenue Low fees for India and Mexico Wide reach Quick transfers French Groupe BPCE Can use TransferWise directly through App Bank of England Permission to use real-time gross settlement account Startups N26 LHV

The consumer drives the need for TransferWise Low Fees Convenience Security Quick Transfers Accessibility Outflow Country New entrants sending money home Students living abroad Low/mid income level Inflow Country Receiving funds What do they value? The consumer drives the need for TransferWise

Key Countries (US Billion$) Migrant Remittance Outflows 2013 2014 2015 2016 United States 56 59 63 67 Saudi Arabia 35 37 39 38 Switzerland 25 26 Germany 20 21 29 Migrant Remittance Inflows 2013 2014 2015 2016 India 70 69 63 China 59 62 64 61 Philippines 27 29 30 31 Mexico 23 25 26

Key Countries (US Billion$) Migrant Remittance Outflows 2013 2014 2015 2016 United States 56 59 63 67 Saudi Arabia 35 37 39 38 Switzerland 25 26 Germany 20 21 29 Migrant Remittance Inflows 2013 2014 2015 2016 India 70 69 63 China 59 62 64 61 Philippines 27 29 30 31 Mexico 23 25 26 There is opportunity in United States, Philippines, and Mexico

TransferWise needs to be innovative and agile to grow Market Trends Increase in App usage Agility of tech startups Disruptive models TransferWise needs to be innovative and agile to grow

Environmental Analysis Strength Challenge Opportunity Threat Easy to use Quick transfers Low fees (10-20 times) Reputation of partnerships Inexperienced leadership Recent PR issues Adoption of tech Consumer Trends Low fees at banks Partnership sustainability Emergence of fintech startups

Alternatives Innovate through new technology & revenue stream Differentiate to related services Launch Digital Bank Innovate through new technology & revenue stream

Differentiate to Related Services Alternative 1 Differentiate to Related Services Differentiate to related services from the customers perspective. Ex: social media/ chat functionality Pro Con Competition Cost Strength Scale Customer engagement

Alternative 2 Pro Con Launch Digital Bank Relationship Dependency Innovate through the value chain by launching a digital bank. Ex: Tangerine Pro Con Strengths Regulation Relationship Convenience Dependency

Innovate through New Technology & Revenue Streams Alternative 3 Innovate through New Technology & Revenue Streams Innovate through the adoption of new technology and expanding to new revenue streams. Ex: adopt blockchain and advertising revenue Pro Con Alignment Revenue Trends Change Management Focus

Customer Satisfaction Decision Criteria Scale the business by increasing the user base Growth Core Competencies Customer Satisfaction Sustainability Ensure financial sustainability of the company Play to strengths Maintain strong customer satisfaction ratings

Decision Criteria Differentiate to Related Services Launch Digital Bank Diversify through ad revenue & New Tech Growth Scale the business Core Competencies Play to strengths Customer Satisfaction Maintain strong rating Sustainability Ensure financial sustainability

Future Forward Leading Financial remittance company in the world Innovate business model through advertising revenue & new technology Financial Sustainability Brand Excitement Zero Fee

Implementation Drive Growth Innovation Instill Trust Banking partnerships Reach new customers Drive Growth Security Considerations New emerging technologies Innovation Invest in IT Banking Partners Instill Trust

Drive growth – consumer awareness Demographic New Entrants Students Public Value Low fees, trust Convenience Accessibility Campaign Location: Mexico & Phillippines Signage in Embassies to create relationship before moving to new country Guerilla Marketing: College Football (Soccer) game “Surprise & Delight” representatives at game Free Drink Tickets Social Media #TransferWire Promotion Continue: SEO, Social Media Digital Word of Mouth Targeting the consumers that require this service is key to growing TransferWire

Drive growth - Natural affiliations Mexico Large need for money transfers Develop bank partnership USA Growing outflow of money transfers Bank of America Leverage existing natural affiliations and growth of money transfers to drive growth

Drive growth - Natural affiliations Phillippines Large need for money transfers Develop bank partnership Canada Growing outflow of money transfers Scotiabank Leverage existing natural affiliations and growth of money transfers to drive growth

Innovation – create hub within transferwire Optimize Business Model Use AI to optimize money pools IT Development Continually improve the platform Security Digital fingerprints Blockchain Invest in research to incorporate technology Invest in people to adapt to technology trends and instill trust by creating a reliable service

Ensure the platform is accessible to the target consumer Drive growth Quick transfers Ease of use Product Lower fees by incorporating new partnerships Offer incentives using Artificial Intelligence (optimize money pools) Price Facebook and Instagram Banks where partnership exists Scooters/mopeds in Mexico and Phillippines Cars for Canada & US Place Ensure the platform is accessible to the target consumer

Internal – hr requirements Innovation Hub 1 Research Scientist Businesses Advertise on TransferWire Platform 5 staff Expansion US, Mexico Office Canada & Phillippines Office 5 staff each Natural growth Invest in people to adapt to technology trends and instill trust by creating a reliable service

Implementation timeline

Cost of implementation

Customer acquisition cost

Assumption for advertisements

from remittance fee to ads will reach “zero transaction fee” by 2028

Increase in traffic will drive revenue growth Amounts in MM Revenue will be 2.2x vs 2019

Profitability driven by advertisements

Positive NPV of USD 5.0 MM in conservative scenario (pay-back period 3.5 yrs)

Kpis and controls

Risk and Mitigation 1. Advertiser Acceptance 2. Employee Buy-In Invest in relationships and reduce rates 2. Employee Buy-In Increase focus and change management 3. Declining Customer Satisfaction Increase personalization of advertising Probability 1. 2. 3. Impact

Innovate business model through advertising revenue & new technology Conclusion Innovate business model through advertising revenue & new technology

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