Management of Innovation: TransferWise

Management of Innovation: TransferWise.

Management of Innovation: TransferWise

Company and Industry Background

International remittances are the funds that people send back to their countries. However, due to business developments and the need to facilitate international trade, the scope of the industry has been expanded and simply called the international money transfer services. The industry has experienced exponential growth over the last decade with the amounts transferred to globally in 2014 totaling to about $583 Billion. Notably, most of these funds have been going to the developing nations since out of the total amount transferred in 2014, approximately $435 were in the developing countries (TransferWise, 2015). The industry has been dominated by global companies including Western Union, MoneyGram, and Ria, which when combined have a commanding presence in over 200 countries. However, despite the industry being profitable, these companies have faced numerous challenges including fraud and unsecured transactions. More so, the industry has experienced growth in new entrants such as TransferWise who are determined to seal the loopholes and address customer concerns.

TransferWise is an international money transfer platform that was founded in 2010 by KristoKaarman and TaavetHinrikus. The operations of the company are based on the perception that money is supposed to flow freely but due to the non-existence of a global currency, this is not practical. Additionally, the founders believed that there were many hidden charges in the conventional transactions for sending money abroad although banks made customers believe that the transactions had zero commission. In this regard, the company seeks to correct the perceptions and remove the deception through offering the remittance services at a true but low cost. Additionally, the company uses only the true real exchange rates to ensure that the customers are satisfied with the amounts transferred. Notably, the company facilitates money transfer services in the United Kingdom, Portugal, Spain, Poland, United States, Germany, France and other countries in Europe. The Headquarters of TransferWise are in the United Kingdom, but the company has regional offices in Estonia, Ukraine, New York, and Florida (Bloomberg, 2016).

Sources of Innovation

There are various motivations within the international money transfer services industry that facilitate the development of innovative solution from TransferWise. These include but not limited to: first, there are constant changes in the business models for firms within the industry. Due to a large number of people accessing digital devices and platforms such as mobile applications and smartphones, conventional methods are diminishing drastically and the company is taking advantage of these changes to create innovative solutions.  Secondly, the remittance fees are decreasing gradually as new players enter the industry. This is due to accessibility to online services that cut the costs as opposed to the traditional methods through banks. In line with the mission of TransferWise of reducing costs of transfers, the company has taken advantage of the online systems to reveal the costs involved, thereby creating confidence and trust among the users (Infosys, 2016).

Additionally, the company seeks to understand the needs of the customers and address their concerns appropriately. This knowledge of the market segments has led to the company developing a transfer system that is secure. Their mobile application is well configured to ensure that all the transaction details are confidential to the application user and the company only. This reduces the risk of frauds or money laundering. More so, the company is motivated by the fact that money transfer needs to be speedy since delays within the transfer system inconvenience the customers and increase the security concerns. In this regard, the company seeks to develop a platform in which the transfer will be almost instant with minimal but reasonable delays due to authentication issues.

Other factors that are driving forces of motivation in TransferWise’s quest for innovation are minimal documentation and convenience for the customers. According to Isaacs (2009), convenience is an important factor to consider when setting up the remittance service platforms especially for the receiver of the money. This is because these end customers are unwilling to sacrifice their time at work to go collect the money from the bank. Therefore, TransferWise ought to consider having a sufficient number of partners and support centers where withdrawal services and queries can be made with ease. Additionally, the receivers of the money often do not always carry adequate identification documents. Therefore, the innovation by TransferWise in this regard should minimize the amount of documentation required to withdraw funds through considering digital identification or biometric systems for ease and practicality of completing transactions.

Types of Innovation

The main remittance innovation used by TransferWise is peer to peer currency exchanges. This is a platform in which the prospective customers are expected to open an online account and then make deposits into the accounts once they are authenticated. The main aim of utilizing this innovation is to cut the costs associated with the exchange rates and transfer fees. Here, the customers are at liberty to choose between the predetermined exchange rates and a rate of their own choice. Apparently, when a customer identified the appropriate exchange rate, TransferWise makes a match within the system and the change of funds is acknowledged. The funds are then remitted to domestically to the recipient’s account within a period of between 24 and 48 hours (Bajpai, 2015).

This innovation used by TransferWise has many advantages attached to it. These include but not limited to saving the transfer costs significantly and security within the system.  All the transactions are carried out in the well-protected mode to ensure that the details remain confidential to ensure that the details of the transaction remain between the sender and the company. This is in line with the money laundering regulations of 2007 under Her Majesty’s Revenue and Customs Act in the United Kingdom where the company is headquartered. The rates of the transfers are also significantly low since the bank’s charges and the effects of brokers are eliminated literally.

Definition of “Value Added” for the firm’s products

The value of the currency exchange and remittance services offered by the company is hinged on a sequence of activities. The value chain begins with understanding the financial needs of the sender who is in diaspora. Once the intention and the need are identified, a basis is laid to empower and stimulate the sender to make the remittances. Additionally, based on the efficiency experienced by the customer, they may return for other financial services that involve foreign currency. Creating a stable business relationship at this level is essential so that the activities of the company can become reputable in the sender’s country of origin, thereby increasing the acceptance of the services. Once the sender is empowered and stimulated, the company collects the money and facilitates the currency exchange depending on the preferences of the sender. The funds are then transferred through formal and legal channels from which the recipients collect the funds.

This value chain is maintained through a series of secondary activities. First, the objectives of the system are laid down to ensure that the customer services offered are complementary so as to establish an efficient remittance procedure.  Secondly, the chosen actors to facilitate the completion of the remittance transactions are reputable with no previous known records of fraud or integrity issues. Thirdly, their processes are assessed continuously to ensure that they are consistent with the domestic finance rules in the United Kingdom and the sender’s country of origin. These ensure that there is no conflict of interests or flaunting of any rules and regulations to ensure best practices. Finally, the company invests in research to evaluate the changing needs of the customers and the emerging trends. This ensures that the customers get the most updated services on one of the most sophisticated platforms.

Core and Distinctive Competencies

There are several strengths associated with TransferWise. First, the process of making remittance is simple and secure. This involves creating a sender profile in which the email address is required. Other login options are also available depending on the approved accounts such as Google or Yahoo. The next step is entering the amount of money that the sender needs to be transferred. Next, the sender is required to complete their personal profiles by giving their contacts after agreeing to the terms and conditions of the company. Next, the sender is required to fill in the details of the recipient including their banking information. Finally, the sender completes the process by uploading a number of funds to transfer into the account (Mitchell, 2014). This process is simple and requires relatively shorter time compared to the timelines offered by the competitors.

The second competency of TransferWise is that the brand name is gaining popularity in Europe, the United States, and the developing nations mostly in Asia. The brand’s acceptability has boosted the business operations through the transfer of up to £1 billion by 2014 (Phillips, 2014). The large transfer volume has also played a major role in the improvement of service through increased revenues. Additionally, the company’s speed of transferring the funds is impressive taking between 24 and 48 hours. This is unlike the number of days that the remittance takes using other services such as the Western Union and MoneyGram. Also, the company offers real-time exchange rates that take into account the prevailing economic conditions of the sender’s country of origin. This ensures that the amount remitted is not affected by the fluctuations in currency exchange rates which happen unpredictably.

Moreover, the user interface of the remittance computer system is easy to understand and navigate. The currency converter is readily accessible and the so that the senders can carry out preliminary calculations before committing to using the system. In addition to the currency converter, the website is designed in such a way that the costs associated with transferring given amounts are also displayed. This ensures that the company is transparent in all the transactions with no hidden costs of processes that may interfere with the integrity of the remittance process. More so, once the profile is created and the funds are ready to be transferred, the sender chooses the methods of remitting the money, that is, directly to the recipient’s bank account or to their emails if the sender does not have sufficient details about the recipient (Price, 2015).

Finally, the company derives its strength in the transfer industry through flexibility. This is achieved through the well-designed application that is usable on portable devices such as tablets and smartphones. This application offered the client the convenience of sending funds regardless of the place and time without actually accessing a computer. Additionally, loading money into the account has unlimited options. Funds can be deposited from credit and debit cards, directly from the bank account, or from other platforms such as PayPal. Therefore, TransferWise is a money transfer platform for many since the convenience, flexibility, simplicity, and transparency are just unbeatable.

Organization Structure, culture, and leadership

At the helm of the company is the chief executive officer, TaavetHinrikus, who also doubles up as the executive chairman of the company. His main duties at the company include heading the marketing department, product development, public relations, and investor relation. He is assisted by the co-founder of the company, Kristo Kaarman, who is the head of various departments including operations; technology, compliance, and regulatory issues (TransferWise, 2016).The two are assisted by another executive, the general counsel of the company who is in charge of the offering legal advice to the company. Apparently, the company organization structure is not solid due to the few years it has been in existence. The most prominent organizational culture at TransferWise is creating efficiency, increasing reliability, and creating partnerships with other supportive business ventures.

Strategy timing and deployment

The company has instituted various strategic activities to expand its command and geographical presence. First, TransferWise uses the unique referral system that is innovative. In this strategy, the customers who bring in new customers are rewarded with since amount. However, this referral amount is shared between the initiating customer and the one accepting the referral. This ensures that the public relations for the company increase at minimized costs. The referrals also save the company a lot of money that could have been otherwise spent in other forms of advertisements and public relations consultancy.

Secondly, the company uses segmentation as a success strategy. Here, the company concentrates on the unexploited market potential from blue-collar migrants. Typically, the remittances through the other service providers largely cater for the white-collar expatriates and students, leaving a wide market without service. Although the individuals in the targeted market segment are much more likely to send little amounts compared to their counterparts, the volume of the remittances makes the company remain profitable through numerous transactions. However, the company is seeking to also factor in European expatriates through classic advertisements and use of business language.

Thirdly, the company uses differentiation to ensure its survival. In this case, the company charges the least remittance fees for the bank to bank transfers in the world. In fact, Save on Send (2016) claims that other competitors such as MoneyGram charge about ten times higher the cost of TransferWise on average. Additionally, the company uses many advertisement channels such as Google ads, Facebook, and Twitter to reach out to the existing customers and prospective customers regarding their cheap rates that are almost incomparable to other remittance service providers. By applying the model like that of WhatsApp to foster growth, the company has been able to acquire greater market share. However, some of the advertisements have had the company reprimanded for misleading consumers.



Bajpai, P. (2015). Understand Peer-to-Peer Foreign Currency Exchange. Retrieved from

Bloomberg. (2016). Company Overview of TransferWise Ltd. Retrieved from

Infosys. (2016). Perspective: Key Trends in the Money Transfer Industry for 2016. Retrieved from

Isaacs, L. (2009). New delivery channels for remittances: Where do the opportunities lie? How will new technologies change the face of this rapidly expanding market? Journal of Payments Strategy & Systems, 3 (3), 217-227

Mitchell, J. C. (2014). Why TransferWise is the Best Way to Transfer Money Abroad. Retrieved from

Phillips, L. (2014). Peer-to-peer exchange firms cut out the banks and brokers. Retrieved from

Price, R. (2015). Here’s How $1 Billion TransferWise Actually Works. Retrieved from

Save on Spend. (2016). TransferWise: Rebel, What is Your Cause? Retrieved from

TransferWise . (2016). TransferWise was born of frustration. Retrieved from

TransferWise. (2015). An Overview Of The World Remittance Industry. Retrieved from

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Management of Innovation: TransferWise

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