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2. Sustainable Disruptor in the Remittance Services industry?
Nanyang
Consulting
TransferWise
Sustainable Disruptor in the Remittance Services industry?
Presented to: Kristo Käärmann and Taavet Hinrikus, Co-Founders at TransferWise
Presented by: Daniela, Minghao, Victor, Vishnu
10 January 2019

3. 3 Internal & External Analysis 4 Strategic Alternatives
Agenda
Page 3
1 Problem
2 Recommendation
3 Internal & External Analysis
4 Strategic Alternatives
5 Implementation
6 Financial Analysis
7 Contingency Plan
8 Conclusion

4. Imbalance of Outflow vs. Inflow
Problem: TransferWise is facing three key challenges that question whether it can remain the disruptor it is today
Page 4
Imbalance of Outflow vs. Inflow
Threat of Blockchain
Getting to Zero
How can you manage scalability when inflows and outflows of certain countries are imbalanced?
How can you stay a disruptor despite rapid developments in Blockchain?
How do you reach operational scale to reach the goal of zero transfer charges?
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

5. Recommendation: Three strategies will enable TransferWise to tackle the key challenges it is facing
Page 5
New Customers
Customer Scale
New Technologies
Student Customer Strategy
Business Customer Strategy
New Technologies Development
Imbalance of Outflow vs. Inflow
Threat of Blockchain
Getting to Zero
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

6. Internal Analysis: TransferWise exhibits strong core competencies and an impressive growth story while being stretched for money
Page 6
Strengths
Weaknesses
Cost efficiency
Profitability since 2017
Strong partnerships with banks
Large customer base (4 million) with $4 billion transactions per month
Bank of England settlement
Limited to bank account transfers
No physical outlets
No significant difference to competitor’s satisfaction rating
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

7. External Analysis: TransferWise operates in a challenging environment with technology offering key opportunities
Page 7
Opportunities
Threats
10% international market share (2018) with 30% market share by 2026
$574 billion remittance market
Technological advancements
Increased globalization
Urbanization and mobile connectivity
Blockchain
Loss of reputation due to partnerships
Security, hacking
Highly regulated market
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

8. Competitor Analysis: The following table illustrates the competitive landscape in which TransferWise operates
Page 8
TransferWise
Western Union
OFX
WorldFirst
Traditional Banks
Speed + ×
Costs
Accessibility
Electronic Transfer
Offline Transfer
Min. Transfer
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

9. Strategic Alternatives: Six strategies have been considered that tackle the challenges TransferWise is facing
Page 9
STRATEGY
Strategic
Fit
Customer Experience
Scalability
Feasibility
Risk
Level
Innovation Level
DECISION
M&A × +
Develop Blockchain technology
Establish physical outlets
Student customer strategy
Business customer strategy
New technology development
Chosen strategies
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

10. Implementation (1/3): Student Customer Strategy
Page 10
What
Target Chinese and Indian students in Europe (UK, Germany, Switzerland) and USA
Why
Large Chinese and Indian overseas student application to address imbalance in remittance inflows
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

11. Implementation (1/3): Student Customer Strategy
Page 11
How
Operations & HR
Marketing
Hire 2 Directors (India & China) from government background, e.g. MoF or MoT to identify local partnerships with BOC and SBI
Appoint University coordinators across regions, starting with London, Berlin, Zurich and Boston
Identify periods of heavy imbalance, e.g. Chinese New Year and Deepavali
Exploit N26’s entry in the UK in 2018 to partner on targeting students
Nominate student ambassadors – 3 per University
Sponsor student events organized by ethnic student associations, e.g. LSE Chinese Society
Provide referral bonuses for students via WeChat links (Chinese students) and WhatsApp links (Indian students)
Offer a free $1,000 transfer amount to students when they sign-up
Offer cheaper transaction rates during periods of heavy imbalance
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

12. Implementation (2/3): Business Customer Strategy
Page 12
What
Target SMEs and large corporations to build the client base
Why
Achieve critical mass, i.e. increase cash flow amounts, to reduce transfer fees – approaching zero
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

13. Implementation (2/3): Business Customer Strategy
Page 13
How
SMEs
Large Corporates
Sponsor business/application competitions for top MBA institutions, e.g. CEIBS, IIM
Approach start-ups, incubators and accelerators, e.g. Mahindra, WeWork, TenCent
Target entrepreneurs with small businesses, e.g. EntrepreneurFirst partnership
Partner with POS system providers, e.g. iZettle (acquired by IntelligentPOS in 2018)
Identify insurance companies, e.g. LIC (India) that have reimbursement products
Work with international Expat communities, e.g. Expat Wine Society
Offer a free $10,000 transfer amount when signing-up
Offer discounted remittance rates for corporate employees
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

14. Implementation (3/3): New Technologies Development
Page 14
What
Invest in new technologies development, i.e. AI, analytics
Why
Increase competitive edge and customer experience
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

15. Implementation (3/3): New Technologies Development
Page 15
How
Customer Experience
Acquire an AI start-up (up to $20m valuation) specializing in algorithms to enable exchange rate forecasting for customers to allow better planning, i.e. similar to CheckFelix’s price forecasting algorithms
Hire 2 UX/UI designers to offer simple customer interface through A/B testing and reduce bugs for real-time exchange rates
Promote customer success stories of overseas students and entrepreneurs, i.e. video content (Instagram, website)
Track customer satisfaction level continuously to identify pain points early
Increase customer support team as number of clients increases
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

16. Key Performance Indicator
Key Performance Indicators: The following metrics will allow TransferWise to track the success of the suggested strategies
Page 16
Key Performance Indicator
Target 1
Number of students transferring money
10,000 in India and China 2
Number of new SME clients
850 p.a. 3
Number of new corporate clients
150 p.a. 4
Customer satisfaction level
Improve from 9.1 to 9.5 5
Number of new technological features introduced
5 per year 6
Imbalance ratio for China and India
Reduce by 20% p.a. 7
Speed of transfer
Reduce to 10 minutes
for key markets 8
Transaction costs of transfers
Reduce by 0.03% p.a.
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

17. Timeline: The following timeline illustrates how the strategies should be executed over time
Page 17
ACTION ITEM
2019
2020
2021
2022
2023 H1 H2
STUDENT CUSTOMER STRATEGY
Government lobbying
University activities, e.g. ambassadors
Recruit
Events
Hire region coordinators
Marketing strategy
BUSINESS CUSTOMER STRATEGY
Sponsor MBA competitions
Target entrepreneurs
POS partnership
NEW TECHNOLOGY DEVELOPMENT
Acquire AI start-up in analytics and integrate
Screen
Acquire
Integrate
Hire 2 UX/UI designers
Customer success stories
Customer support team expansion
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

18. Financial Analysis: Current Market Share is 9.6%
Page 18
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

19. Financial Analysis: If continuing in the current trajectory, a 19% market share can be achieved in 5 years
Page 19
Challenges
Commission Rate does not reduce
Number of customers cannot increase in current rate
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

20. Financial Analysis: New investment required to execute the recommendations
Page 20
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

21. Financial Analysis: 33% Market share achievable in 5 years, while % commission is progressively reduced to 0.21%
Page 21
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

22. Financial Analysis: With profits increasing 10 times
Page 22
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

23. Contingency Plan: The following risks are underlying the suggested strategies and need to be mitigated timely
Page 23
Anticipated Risk
Probability
Contingency 1
New government regulations
Medium
Strong lobbying 2
Reputation loss due to partners
Medium
Be transparent in all dealings 3
Insufficient reach with students in China and India
Low
Engage local student ambassadors 4
Poor take-up rate by businesses
Medium
Share customer success stories 5
Liquidity risk
Medium
Prepare a financing pipeline 6
Rapid Blockchain advancements
Low
Establish strong customer loyalty 7
Replication by banks
Medium
Lower fees progressively 8
Poor customer traction
Low
Strong customer feedback channels
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

24. Conclusion: Three strategies have been introduced that tackle the challenges TransferWise is facing an allow it to continue disrupting
Page 24
New Customers
Customer Scale
New Technologies
Student Customer Strategy
Business Customer Strategy
New Technologies Development
Imbalance of Outflow vs. Inflow
Threat of Blockchain
Getting to Zero
Problem
Recommendation
Analysis
Alternatives
Implementation
Financials
Contingencies
Conclusion

25. THANK YOU FOR YOUR ATTENTION
Nanyang
Consulting
THANK YOU
FOR YOUR ATTENTION
We now welcome any questions you may have.
Kindly turn this slide for the appendix.

26. APPENDIX N Please turn this page for supporting material. Nanyang
Consulting
APPENDIX
Please turn this page for supporting material.

27. Financial Analysis: Student Customer Strategy
Page 27
Appendix

28. Financial Analysis: Business Customer Strategy
Page 28
Appendix

29. Financial Analysis: Direct Additional Revenue
Page 29
Appendix