TransferWise CEO Kristo Käärmann says being honest with customers is the key to success – and he'd be happy to show Australia's big four banks how

TransferWise founders Kristo Käärmann and Taavet Hinrikus (Jake Farra)
  • Kristo Käärmann, CEO and co-founder of foreign exchange platform TransferWise, says it makes perfect sense for Australia’s big four banks to integrate the company’s platform in order to get their customers back.
  • Käärmann told Business Insider Australia that after its successful partnership with Up, TransferWise had a number of other integrations lined up with more traditional banks around the world.
  • Despite international travel largely disappearing in 2020, the FX service doubled its profit in the last 12 months with Käärmann insisting globalisation is only speeding up.
  • Visit Business Insider Australia’s homepage for more stories.

The CEO of one of Europe’s most valuable fintechs says his door is always open to Australia’s big four banks when they’re ready to get real.

Kristo Käärmann, who co-founded London-based TransferWise, must be doing something right. In the last decade, the foreign exchange platform has undercut its wildly expensive competitors to spread around the world.

This week, it announced its fourth consecutive year of profitability banking more than $38 million – not bad for a startup in just its 10th year – and grew its revenue by 70% in a year that international travel was put on hold.

The secret, Käärmann says, is complete transparency with customers showing them exactly what they pay when they use the service and comparing it to the rest of the market.

The simple idea has seen it integrate with 12 banks around the world, including Up in Australia, allowing their customers to use TransferWise from their banking app.

Käärmann promises he’d happily do the same with Australia’s big four banks

“We’d be totally open to that. We already have a huge number of Westpac, Commonwealth Bank customers, ANZ [and NAB] customers so it actually makes sense for them to bring them back on their own platform,” he told Business Insider Australia.

Given the big four banks make a motza from the $2.14 billion of FX fees Australians pay every year, it could be his Estonian optimism speaking.

Kristo Käärmann’s door is open to the big four banks (Jake Farra)

But as more banks integrate with TransferWise, Käärmann suspects competitive pressure will build.

“It’s not that banks like Westpac and ANZ are losing their customers to TransferWise but that they’re losing their customers to banks like Up because they get a great banking experience, but also a substantially better international experience as well,” he said.

While unable to comment further on specific partnerships, Käärmann did acknowledge “quite a lot of large traditional banks” were coming around to the idea.

“Going forward you should expect to see us integrate with more traditional banks bringing us to their platform.”

Foreign exchange remains largely opaque

Certainly, big four executives still seem in a great deal of denial. Facing an economics committee earlier this month, they were borderline recalcitrant.

“Our fee is an all-inclusive fee. There are no additional deductions… [and that fee] we think is very straightforward,” NAB group chief risk officer Shaun Dooley said.

“That’s simply not right,” Andrew Leigh, shadow assistant minister to Treasury, replied, pointing out that NAB hides the cost of the ultimate exchange rate.

Commonwealth Bank CEO Matt Comyn said that if the bank couldn’t be more transparent on those fees he “would need a good reason to explain why we can’t”.

Given this is how the big banks, and indeed the broader FX market has operated for decades, no one in Canberra ought to hold their breath waiting for Comyn to provide one.

International travel might be off, but international transfers aren’t

Despite living through a time when Australians, by and large, can’t travel much within their own country let alone outside of it, foreign transfers still have plenty of use.

“Although people can’t travel, they still live very international lives. They have family that lives overseas, they might still work overseas or run a business with global reach,” Käärmann said.

“Those who are in digital commerce for example are much more active than they were before so those parts of the business are evening each other out.”

While the world might appear more inward-looking, as populist movements like Brexit continue on, the reality is people’s lives are only becoming more intertwined.

“I think COVID has only proved that. Services that we were accustomed to receiving locally, can now be offered remotely, and this process kind of leads to more globalisation and global trade,” he said.

“I suspect if anything globalisation is speeding up because technological forces and the efficiencies they bring are so powerful and they’re really hard to counteract.”

The few real instances where that is being challenged, like Chinese-app WePay facing a ban in the US, may indeed offer an opportunity to TransferWise which operates in both countries.

“We haven’t explored that but if there was a demand for our service and a legitimate use case in which we can help then in that kind of market then, of course, we’d consider it,” Käärmann said.

Either way, Käärmann says TransferWise will make those decisions with the customer in mind.

A lesson Australia’s own banks could do well to learn.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.