Wise (Formerly TransferWise) SWOT Analysis: Strengths, Weaknesses, Opportunities, and Threats of Wise

Wise - TransferWise SWOT Analysis

Wise, formerly Transferwise, is a financial technology that is based in London that deals with online money transfer. The brand has experienced remarkable growth; as of 22nd September 2020, the brand had 8 million users, up from 6 million users in 2019. Additionally, the platform transacts in over 750 currencies globally that include USD, GBP, AUD, EUR, and CAD. Transferwise avails its users with the option of using multi-currency accounts. The brand was established with the view of providing affordable and easier solutions for online transfers and currency conversion rates.

SWOT analysis is a critical tool for enabling brands to understand their competitive position in the market. SWOT analysis will enable Wise to understand its strengths, weaknesses, opportunities, and threats so that it can compete with insights in the marketplace.

Wise (TransferWise) – At a Glance

NameWise
Websitewise.com
FoundersTaavet Hinrikus, Kristo Käärmann
Chief Executive Officer (C.E.O.)Kristo Käärmann
Type of corporationPublic company
HeadquartersShoreditch, England
Year FoundedJanuary 2011
Revenues (FY 2020)£302.6 million
Key Products/ServicesFinancial services, remittance
Key CompetitorsRemitly, mPayX – Money Transfer Software, Money Transfer System, Sila, Veem, Vayupay, Azimo, FINSYNC.  

Strengths of Wise

Global presence

Wise is available globally in over 60 countries. Its presence in these locations enables the brand to reach customers beyond its country of origin to provide its services and in return, the brand is able to get more revenues and profits. With this presence, the brand can achieve more market penetration and more expansion in particular local markets.

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Strong financial performance

Wise has recorded strong financial performance in the recent past with stronger investor backing. The brand’s current net worth stands at $5 billion; this only goes to show that the market has strong confidence in the brand. In 2019 and 2020, the brand generated revenues worth £179 million and £302.6 million respectively.

It has recorded a 43% increase in revenues in the first quarter of 2021 as compared to a similar period in 2020. Strong financial performance is critical for enabling a brand’s expansion and investment strategy. Every brand needs funds if it will invest or expand in the market.

Low rates

The brand was formed in a bid to find a solution to the high costs of transferring money online as well as high conversion costs for converting one currency to another. Wise, therefore, operates on a minimal cost structure and therefore has gained a strategic advantage against its competitors in the market like Paypal.

To sell at low costs and still attain higher profit margins, the brand makes use of a unique matching system so that it does not have to bear transfer costs on behalf of the customer and reduce its profit margins.

Strong human resource

Human capital is the driving force behind every successful business.  Wise has a huge investment in its human force experience and skills. The brand has a competent, experienced, and committed workforce that ensures customers have a unique and excellent experience.

Weaknesses of Wise

Limited marketing

While the brand boasts of more than 8 million users, this user base is out of the brand’s limited advertising and marketing. The brand needs to expand strategic marketing to explore the full potential of its products in the market.

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The brand is a private company

One of the reasons that limit the brand’s growth is its private status. This limits its resource accessibility to its private ownership base. By going public, the brand is able to access public funding so that it is able to invest more in product innovation and in its expansion strategy. Raising more funds will increase the brand’s ability to grow.

Opportunities of Wise

Technological innovation

Technological innovation has become a major leveraging factor for brands seeking to elongate their product life cycle, introduce new products, increase efficiencies and effectiveness of operations. While Wise is sufficiently a unique product, through technology, the brand could continuously improve on its product offering through technological innovation.

Global outreach

Online money transfers occur almost everywhere in the globe. Wise, therefore, has a great opportunity in the entire globe. Wise has the opportunity to present itself across the globe as the online money transfer and conversion brand of choice for consumer needs. Through this growth, the company could significantly increase its market penetration reach and as well increase its revenue generation and thereby increase its profitability.

Going public

At it is, Wise is a privately listed company. The brand has the opportunity to go public by listing its share in the stock market.  Going public can help Wise significantly increase a brand’s capital base so that it can use it for global expansion. Going public will also help the brand become transparent, relevant and also increase brand value.

Customer needs, tastes and preferences

The changing customer needs, tastes, and preferences continue to define new competitive edges, uniqueness of products/services. Wise should invest in identifying the changing customer needs so that it can strategically position itself in the market as a brand that offers the much-needed solutions for the evolving needs among customers seeking online money transfers.

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Threats of Wise

Low barriers to entry

The world of online money transfer has low barriers to entry; new competitors can easily find their way into the marketplace and challenge Wise among other existing companies. Such new entrants into the market pose a significant threat to the market as they will dilute the market value and decrease market shares for existing brands. New entrants may offer better solutions at lower prices in order to penetrate the market; this will impact Wise negatively.

Stiff competition

The online money transfer industry is rife with stiff competition from already existing businesses like Paypal which compete with Wise for the same customers. All these existing brands have immense resources that they use to sharpen their competitive strategies to acquire more customers and increase their market share. This means Wise runs the risk of losing its customers to its competitors. The brand also faces indirect competition from brands that offer similar products in the market.

Conclusion

Wise is a formidable force with a unique solution in the market. it however needs to continuously innovate, strategically conduct marketing for more brand awareness and more global reach.

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