TransferWise has just integrated with its first Australian bank and it might become the new normal here

Up co-founder Dominic Pym with TransferWise head of banks Murali Akella. (Supplied)
  • TransferWise has integrated with digital bank Up, to make it the first Australian bank to allow its customers to use the FX service directly through its app.
  • It marks an evolution for TransferWise, which has made a business out of calling out and undercutting banks around the world.
  • While it has predominately partnered with challenger banks overseas, head of banks Murali Akella told Business Insider Australia, it’s open to working with any bank to offer customers cheap transfers.

Money transfer service TransferWise has just integrated with digital bank Up — it’s first in Australia — and it could prove a game-changer.

The move will mean that Up customers will be able to move their money around the world via their own banking app, with TransferWise’s system built into it.

“By plugging into our API, Up just became the fastest and cheapest to use in Australia for international payments. In fact, Australians staying with traditional providers could end up paying between 5-8x more than Up customers, who will have a seamless, low-cost TransferWise experience without leaving the Up app,” Murali Akella told Business Insider Australia.

The integration marks a coming together for both self-proclaimed challenger fintechs. For TransferWise, it builds its customer base. For Up, it offers their customers a whole new service.

“By using TransferWise, Up customers will be able to send money cheaper and faster than sending money with traditional banks. TransferWise joins Up’s portfolio of partners including founding partners Ferocia and Bendigo and Adelaide Bank, Mastercard, Google, and Afterpay,” Up co-founder Dom Pym said in a release.

Perhaps, more importantly, the move marks an important strategic change for TransferWise. Its business model has long been built on hacking away at big bank profits, by undercutting them on foreign exchange (FX) fees.

READ MORE: Australians lose $2.14 billion a year in currency exchange — now TransferWise’s new debit card promises to slash overseas fees by a tenth

In recent times though, TransferWise has changed its tact. While it still offers to undercut other FX providers, it’s now looking to offer to do so directly through the banks. This partnership with Up, a wholly-owned subsidiary of Bendigo & Adelaide Banks, is the first in what looks to be the future of the company, according to TransferWise head of international expansion Venkatesh Saha.

“Challenger banks and big banks alike are coming to us knowing we’ve figured out how to move money around the world cheaper, faster, better, and more transparently than anyone else. They want to know how they can be part of that, either as a partner or in any other way. So we were really optimistic and hopeful that we should be able to have more of these partnerships in the near future,” Saha told Business Insider Australia earlier this year.

It’s a strategy the company has pursued overseas, teaming up with challengers Monzo in the UK, as well as N26, LHV and Bunq throughout Europe. But it’s not just the little guy with which that TransferWise is getting into bed with — it recently did the same with BPCE, a French banking group with 40 million-odd customers.

Given TransferWise boasts around 6 million direct customers of its own, the banks offer a potential goldmine of new users and transactions. But while it’s now choosing allies among the big financial players, it’s not submitting to their terms.

“We’ve taken a real activist stance in the past, calling out banks for overcharging and hidden fees, and make no mistake, we’ll continue doing that. But, equally, we want to be part of the solution, not the problem. So we want to call them out but then we want to also tell them that we can also help,” Akella said.

The same goes for the big four Australian banks. If they can’t beat TransferWise, why shouldn’t they be able to join them?

“I’d be absolutely keen to speak with any Australian bank that wants to shift away from what they’re currently doing,” Akella said.

In the meantime, Akella said TransferWise will continue to attract a growing list of challengers and second-tier banks, at least giving Australians a greater choice.