TransferWise’s SWOT analysis and Company Profile

Introduction

TransferWise is a company founded in 2011 by Kristo Käärmann and Taavet Hinrikus. The company is a trusted name in the online money transfer services industry with approximately 8 million active users.

The platform currently supports over 750 currency routes around the world, which includes major currencies such as the USD, GBP, AUD, EUR, and CAD. It also enables users to use multi-currency accounts.

The founders of the company founded it to solve an issue when they were having working between two countries, their native country Estonia and the UK. Trying to convert euros to pounds and the other way round, the founders incurred high bank charges.

To fix the problem, they started looking for a solution. Soon, they got the idea to provide users with a platform that allowed for easier and less costly solutions. That is how the company initially came into being.

The company has gone through many ups and downs ever since its inception. However, despite all these problems, the company has stayed persistent in its goal to provide online money transfer services. Through its years of service, the company has also gained expertise.

Furthermore, it has made a name for itself in the market. There is a lot of competition in the same industry, but TransferWise has made a special place for itself.

The way TransferWise works is also unique. While the company provides users with online money transfer services, it does not do it in the traditional way, such as Western Union or SWIFT payments.

Instead, the company matches the amounts sent by users with other users that want to carry out the opposite transaction. While the process may sound complicated, it is not. The platform has an efficient process that manages all these transactions seamlessly.

For example, when a user wants to transfer 100 USD to GBP, TransferWise does not transfer the amount directly.

Instead, it matches the amount with another user that wants to transfer GBP to USD. This way, the platform avoids the charges associated with transfers.

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These charges include conversion charges or the charges associated with cross border payments. In the process, the company also charges users a transfer fee, which is negligible compared to other alternatives.

TransferWise’s Company Profile

Given below is TransferWise’s company profile.

NameTransferWise
Websitetransferwise.com
FoundersKristo Käärmann, Taavet Hinrikus.
Chief Executive Officer (CEO)Kristo Käärmann
Executive ChairmanTaavet Hinrikus.
HeadquartersLondon, United Kingdon.
Type of corporationPrivate.
Year founded2010
Revenues (2019)£179 million (equivalent to approximately USD 228 million.
Company valuation (approximate)$5.5 billion.
Key products/servicesOnline money transfer, debit card, business and bank accounts.
Key competitorsMoneyGram, Payoneer, Western Union, WorldRemit, Revolut, Qonto, Azimo, PayPal, XE Money Transfer.

TransferWise’s SWOT Analysis

For a better understanding of TransferWise and its business, it is best to perform a SWOT analysis. SWOT analysis is a tool that provides an overview of a company’s Strengths, Weaknesses, Opportunities, and Threats.

By studying these, users can get valuable insights into the business structure of a company. For TransferWise, these areas below.

I) TransferWise’s Strengths

The strengths of a company represent all areas that the company excels or in which it beats its competitors.

These areas mostly include the processes or fields of expertise of a company that it generates internally. For TransferWise, these include the following.

1) Availability

TransferWise is available in over 60 countries around the world. The platform’s availability in these countries shows that it is popular and wanted in these areas.

TransferWise can also attract a higher number of users from these locations, increasing its userbase and revenues. Similarly, the platform is accessible to millions of users around the world, which is a great strength for it.

2) Strong financial health

Overall, TransferWise is financially strong with outstanding financial performances in the past and a strong investor backing.

The company’s current net worth is above $5 billion, which shows the market’s trust in it. Similarly, the company generated revenues of over $228 million (£179 million) in 2019, which shows the company’s financial health.

3) Low costs

One of the main advantages that TransferWise has over its competitors, such as Western Union or PayPal, is the low costs associated with its services.

Due to its unique matching system, the company does not have to bear the costs of sending payments over borders. It also translates to lower charges for its users. Some transactions cost less than 1% for users, and can sometimes even be free.

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4) Human capital

Human capital is the value of a company’s workforce. It includes the value of their experience and skills. For TransferWise, their human capital is also a part of its strengths.

The company has a competent and committed workforce that acts as a powerful source for its competitive advantage. Its workforce also allows TransferWise to develop unique products and increase customer satisfaction.

II) TransferWise’s Weaknesses

The weaknesses of a company represent areas in which it lags behind the competition. These are areas related to the internal workings of a company. For TransferWise, the weaknesses consist of the following.

1) Marketing and promotion

TransferWise has a unique product and gets everything right for its targeted market. However, the company fails to market or promote its products.

While the company has approximately 8 million users worldwide, given its products and services, it has the potential to be much higher. If the company promotes its products in the right way, it can significantly increase its userbase. However, the company has failed to do so.

2) Delayed decision-making

TransferWise, in the past, has failed to capitalize on many opportunities, which means lost earning potential. The inability to capitalize on the opportunities stem back from the company’s lack of prompt decision-making.

For a company that is the size of TransferWise, the decision-making process should be timely. However, the company does not do so, which is one of its weaknesses.

3) Private company

One of the reasons behind the company’s slower than expected growth has been its private status. The company has the potential to multiply its growth by going public.

That is because going public allows companies to increase their efficiency and ability to generate capital. While the company has raised enough capital in the past, it is still missing out on the opportunity to increase its growth.

III) TransferWise’s Opportunities

Opportunities, in SWOT analysis, represent external factors that a company can exploit to its advantage. These are factors that the company can convert into strength in the future. The opportunities that TransferWise can use to its advantage include the following.

1) Technology advancements

While TransferWise has a sufficiently unique product, it can still improve its services. The advancements in technology present outstanding opportunities for the company.

By exploiting these opportunities and using the latest technologies, the company can increase its growth and userbase significantly. Since the company operates in the technology industry, it can also use these advancements to gain a competitive edge over others.

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2) Globalization

Businesses around the world have become global, which means their transactions are not limited to a particular location.

It opens the opportunity for TransferWise to become the first choice for these businesses for their online transactions and money transfer needs. By exploiting the opportunities, the company can significantly increase its revenues and profits.

3) Going public

As mentioned above, TransferWise is a private company. The company has the opportunity to go public by offering its shares in the stock market.

It can allow the company to significantly increase its capital and use it in global expansion strategies. By going public, the company can also become more transparent and relevant, which can increase its brand value.

4) Customer needs

TransferWise also has the opportunity to analyze its customer needs and customize its products for those needs. It can help TransferWise retain its existing customers and attract new ones at the same time.

Similarly, new markets and niches are emerging in the market constantly, which presents an opportunity for the company to exploit and use it to its benefit.

IV) TransferWise’s Threats

The final factor that SWOT analysis looks into is threats, which are the opposite of opportunities. Threats are external factors that can affect the company negatively if they realize in the future.

These are factors that the company must keep a close eye on and sometimes take preventative measures to tackle. The threats that TransferWise faces include the following.

1) Low barriers to entry

The market that TransferWise operates in has low barriers to entry. It means new competitors can easily enter the market and challenge the existing names.

It poses a great threat to the company as new entrants can dilute the market and fight over the existing customers in the market.

Similarly, new entrants can also come with better solutions or lower prices, which can impact TransferWise negatively.

2) High competition

The online money transfer market has many big names that compete for the same customers. The high competition in the market can pose a substantial threat for TransferWise as it must fight for the existing customers.

Similarly, the offline transfer market also has high competition with well-established names such as Western Union or MoneyGram, which poses an indirect threat to TransferWise.

Conclusion

TransferWise is a company that serves in the online money transfer market. The company has a unique product that caters to the needs of millions of users online.

While the company has faced a high level of competition, it still has been able to make a name for itself in the market.

A detailed SWOT analysis of the company is provided above, which details its strengths, weaknesses, opportunities, and threats.

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