Up banking on TransferWise in forex deal

TransferWise is partnering with digital bank Up to let consumers move money overseas ­directly from their transaction ­account.

Murali Akella, head of TransferWise’s banks unit, and Up co-founder Dom Pym in Melbourne. Picture: Stuart McEvoy.

UK-based online money transfer outfit TransferWise is partnering with digital bank Up to let consumers move money overseas ­directly from their transaction ­account.

The integration with TransferWise makes Up the first Australian bank to provide international money transfers with no ­exchange rate mark-ups. Up customers will know upfront exactly how much they’ll pay in fees and the corresponding amount they’ll receive in the foreign currency.

The partnership with Up, which is backed by Bendigo and Adelaide Bank, is the latest step by TransferWise, valued at more than $5bn, to collaborate with banks on making money transfers as simple as possible.

The head of TransferWise for banks unit, Murali Akella, said that sharing its infrastructure with banks was the best way for it to disrupt the traditional money transfer environment.

“This is a natural progression for us. We started as a consumer-oriented business; we then looked at the small and medium businesses, but over time we realised that the best way to get consumers to use our technology was to go to where people keep their money and where they borrow money,” he told The Australian.

The TransferWise for banks launch in Australia, follows a succession of bank partnerships across Europe, including Monzo in the UK, Bunq in The Netherlands, N26 in Germany and LHV in Estonia.

TransferWise has also announced a partnership with BPCE, France’s second-largest bank and more recently in the US with small business lender Novo, and Stanford FCU, a credit union that serves the Stanford University community and tech companies in the Bay Area.

Up co-founder Dom Pym said partnering with TransferWise’s was a no-brainer.

“We could have partnered with any money transfer service, but we saw a real affinity between what we wanted to do and what TransferWise wants to do,” he said.

“We want to give our customers clever ways to organise their money, and simplify their lives and the partnership is another way for us to do that.”

According to Mr Akella, Australian consumers pay a hefty premium on money.

“They just don’t know the hidden fees are out there and Australia is one of the top five countries in the world where it’s expensive to send money,” he said.

“With this integration, Up customers will be paying between five to eight times less than consumers using traditional providers.”

TransferWise, backed by Sir Richard Branson, has been agitating for action in Australian that forces banks to make pricing more transparent. The ACCC’s recent probe into foreign currency conversion services in Australia showed that individual consumers who used the big four banks to conduct money transfers in US dollars or pounds during 2017-18 could have collectively saved about $150m if they had used the lowest-priced supplier.

With the regulator calling for clearer pricing by banks, Mr Akella said TransferWise was open to working with the traditional players and growing crop of neo-banks. “We want to be part of the solution and, rather than threaten banks, what we offer is an alternative architecture that they can use to give their customers a better deal.”

TransferWise’s technology may be available to all banks, big and small, but Mr Pym said that outfits such as Up had a lot more flexibility when it came to testing and delivering the best innovation to consumers, compared to other digital banks in the market.

“TransferWise is the first non-Bendigo and Adelaide issued ­financial product that we are ­offering, so it’s a signal that we are open to partnering with third-party technology providers,” he said. “The difference between us and someone like UBank (owned by NAB) is that we have complete freedom in what we can offer.

“We are interested in technology-led banking, rather than banking-led technology.”