Wise Group plc (WISE) Earnings Call Transcript & Summary

Great. Hi, everyone. Thank you for joining us. My name is Alastair Nolan. I look after payments and fintech research here at Morgan Stanley out of Europe. Delighted to be joined today by Wise's CTO, Harsh Sinha. Harsh, thank you very much for joining us.

Thank you for having me.

Great. Well, look, I thought we'd maybe kick off with a couple of more introductory questions, could cover off a couple of the kind of key topics that I see out there in the market at the moment. And then we can go into more specific kind of product-related questions and topics and particularly going to dig in on the infrastructure side, if that makes sense. So maybe just to kick things off for those investors who maybe are a little bit less familiar with Wise, can you talk a little bit about what the product and the problem that Wise is really tackling and solving around cross-border FX is? How it's going about kind of executing on the mission? And maybe kind of where the product is more differentiated?

Yes, sure. So Wise is the global payments technology company. We've been around since 2011. We started off as a business that allows you to move money from point A to point B, like one country to another. And basically, for consumers in the beginning, and around 2016, we started investing also in building our business proposition, which is again enabling businesses to onboard and help move money around the world. And then fast forward a few more years, we, at that time, we used to be called TransferWise, now we are called Wise. We did a rebrand before we went public. And we have added on other products to solve other customer problems that our customers keep saying they have. And the big product there is our Wise Account. So it's not just enabling you to move money around the world, but actually having [ any need ] to hold money in different currencies in Wise. So right now, you can hold money in 52 different currencies. We also give you local account details. So for example, if you are sitting here as a business or a consumer in the U.K., you can get an ACH routing number and account number without ever stepping foot in the U.S., which is a pretty big valuable product we think about if you're a business getting paid in the U.S. or paying suppliers. So you're not doing cross-border FX, you basically are receiving funds potentially in USD when you get paid and then parking them for the next month, maybe able to pay somebody out, but then doing this across the globe. And as we evolve, like we have now got different business lines, so we've got the Wise Account, which focuses more on consumers. But Wise Business, where we are basically building a business account with a lot of what I call the software layer around invoicing, expense management, multi-user access, accounting platform integrations that enable this to become a primary account for businesses. And then our third business line is the Wise Platform, which is still an early-stage enterprise product, which other banks or other third-party companies would integrate our plumbing and infrastructure and our APIs to move money around the world still in their interface. Think about it as like a replacement for SWIFT in correspondent banking. So that's kind of like the value proposition in the journey we've been in. Right now, like we move over GBP 100 billion a year across our network that we've built. Last 3 months, we've had 5.8 million active customers, overall 16 million customers across the world. And yes, in deposits, we hold about GBP 9 billion in deposits so far. GBP 9 billion deposits across the Wise Account.

It's a really helpful overview. I think one of the areas and kind of one of the things why it's been really vocal about is this Mission Zero, this desire to continue to cut prices, and I guess I also find investors kind of maybe struggle with how you end up towards zero pricing and still have a profitable business model that Wise currently has today. So maybe you can talk a little bit about that. And is it really the concept here kind of scale economy share? Is that the way to think about it? And can you just walk us through how that works in terms of the economics?

Yes. I mean I think scale economy shared is like a good one liner. Just generally, the way we think about it is that our challenge -- all of you in the room, if you to think -- if you fast forward 10 to 15 years from now, we're moving money around the world be much cheaper than it is today or just accessing your international finance will be much cheaper than it is today. We fundamentally believe it will be. The cost of actually doing international finance should not be this high. Back in the day when a lot more -- Western Union had like these different branches, cash was being handled a lot more, the risk was much higher. The markup had to be much, much higher for the risk you are carrying, but now it's just bits and bites moving across systems. And we are showing ourselves that as we connect and build our infrastructure, that we connect to different parts of the domestic payment network in each country, that we can be getting more and more instant payments. 52% of our payments are not instant, which means from origination to destination in less than 20 seconds. We are the biggest player in this space, with the market share we have around, the number of instant payments that are happening. But why am I talking about instant payments when you talk about pricing? So I'll give you an example. Most of the calls that we get from a CS perspective, customer support perspective, is when you get anxious about your money. If you're moving money through, let's say, fund the down payment in that retirement home that you're trying to buy in Spain, if you get any inkling that it has been slow, there's some challenges, you pick up the phone and call, that adds the cost. If it's instant payments, before you pick up the phone, the money is already there. So you don't have to call me. That drives economies around like if it's faster payments, then we'll be having lower cost. And then we turn around, and they give you that price and cost savings back to you. That drives volume. So that if you have lower pricing, we do believe that people will eventually -- differentiation would be only around price and mostly around price as the first thing because most people switch to Wise, first reason price, and they stay on for convenience, instant payments and transparency. So as we build more and more volume and more word of mouth, basically, we'll have a big flywheel that's moving. And the goal here is, it's a very weird mission to say, if you were to say our mission is money without borders, Tencent and instant. So the goal is when you're setting a mission for the company, you say like eventually free or essentially free. And it's a very big inspiring part for organization to say, "We do believe that this is where pricing is heading, and we should be able to continue to drop prices." And if you fundamentally believe that the industry is heading there, then it's better to be a leader and a [Indiscernible] in this. And we see it in how we are seeing our flows overall move. Do I believe that we'll be at Mission Zero in the next 7 to 10 years? Less likely, very less likely. But do I know how to get to, say, from 30 basis points to 20 basis points, for our teams for moving money from GBP to say, USD? Yes, I think so. So like that's the overall thesis here. And then as we do this, we are already seeing what -- as our company has evolved, we've had other revenue streams. So when we first started, we had one revenue stream, which was basically transfer of money. Now we have the Account product, we have cards interchange. We are providing an assets product, which also gives us an ability to manage your funds and also take a fee on that. So there's other things and adjacencies that open up where customers ask us to do different things, for which they pay money for.

And maybe just to take that example, you mentioned, say, in the U.K. getting from 30 to 20 basis points, is the right way to think about that, that ultimately the profitability on that transaction is the same, but you're able to take cost out in around the cost to execute. Maybe you can talk around what exactly it is you do to enable that.

Yes. So we have a fundamental thesis that we do not build -- we do not cross-subsidize, and we basically want to build the profitable and sustainable business for the long run. And we've done this since 2016. So it's not like this is a new thing for us. We've been profitable for the last 6, 7 years, and we'll continue to do that. So we have -- for every transaction, we have a profit margin baked in, and that's set. So the only way we drop prices is when we know we can sustainably do it and have it drop for the long term. And the way that we do it is by finding efficiencies around cost. So either it's removing partners. So if you think about Wise, the biggest competitive advantage we've built is this network that we've built. And the network is basically connecting domestic payment systems in different countries to our systems, so every time we go directly to the rail. So for example, we are directly connected to FPS in the U.K. Before we were connected to FPS, we were using a partner bank. So obviously, when you transact with a partner bank, we had to pay them fees. When we got down to the FPS, which is like the barebones scheme-level integration, our fees went from 60p to the partner bank card transaction to 6p. So now that we can turn around to bake our margin and return the rest to our customers with an operating cost that we also have. And that allows us to basically scale. When we do that, volumes grow. And [ vitality ] in the product grows, NPS goes higher, and that's how it continues to move. Same thing we would do with as we get more volume from our platform customers, we basically bake that in. Things go down, we can then -- volumes go higher, we can leverage better costs, better pricing and then [ leverage is ] repeated on price.

So kind of consistent reduction in fees, offset by lower costs. And then I guess you alluded to the fact that there's other products as well coming in and things like spending on the Wise card. Maybe you can talk a little bit about the dynamics there. I think that's a take rate that other take rate has moved up quite nicely and kind of maybe what's driving that and the outlook there.

Yes. I mean this is why you have a product and technology guy in the States and not a finance guy. So -- but generally, I would say, the accounts becoming more and more relevant for people, right? So while I think we've seen, as we've built the Account current product, it is becoming more of a multi -- what do you call like it, a multiuse product, right? Fundamentally, I see that people who onboard to the Wise Account are 50% more sticky than if they just came and used our Transfer product, and we are seeing that more -- evolve more. We're also positioning our product a little bit more because it's a better experience if you already hold money in Wise because if you have money in Wise, then generally, if you're especially sending to a Wise customer, it's all instant, no matter where they are in the world, but also the managing of the funds is much easier. And then you're more likely to use it as a primary accounts that increases the adoption of different features, and it does happen when take rate goes up. But the core principle that we think about is how many customer problems are we solving for you customer X, Y and Z, right? So if you're solving more than one, we're probably going to grow together and hopefully solve the right things for you as a customer and that increases our revenue too.

And you mentioned the Wise Account there. And I think, in the introduction, you talked about kind of GBP 9 billion of deposits. That number has been growing really, really quickly. Can you talk about kind of why that is, what's driving it? And I think the kind of add-on question then is around net interest income, and kind of how you're thinking about managing that? I know there's a desire to give as much back to customers as possible, but maybe you can kind of clarify how you're thinking about that, even particularly from a kind of product point of view.

Yes. So deposits have been growing pretty healthily. I think partly it's driven by just the number of countries we can launch the Wise Account in. So if we didn't exist in the country, now we can, and you can hold deposits that tends to grow. Also, we're seeing a healthy clip on businesses. So I think the SMB segment, in general, is pretty poorly served across the world for business banking. And if you're doing cross-border, especially, then it's actually even less -- more poorly served. So that business is actually getting more towards Wise Business or Wise Business account. And then business tend to have more money to hold. That's why it kind of like correlates a little bit. Generally, also, I think what's happening is people are understanding that if you have cross-border needs and you are doing treasury-like work or you have to pay suppliers and like in and out of -- moving money in different currencies, you're better off holding in the Wise Account because the money is more liquid. I'll give you an example. Right now, if you hold money in that [ crest ] -- I don't know if there's a [ net expense ] here. But if you want to take your money out online, every day, you have a limit of GBP 25,000, that's not very helpful. So then you have to go to the bank or bank branch and do a larger transfer. So if you are doing payroll and stuff, like it's actually harder for you to do those larger payments, if you are entering cross-border, if you're holding in a near-regular U.K. bank versus if you hold money in Wise, where we don't have the limit and you can just do the transfer in only one. So those features actually have helped, I think, increase inflows. And then on your question on net interest. So like it's still early days for us, like we do believe that we should be sharing what we earn on those balances from those balanced customers or Account customers, we should be sharing the returns with them. So we have launched a product around cashback in the U.K. We have -- we are paying off also returns in Europe. And we are also starting to pay returns in the U.S. But it's still early days on like understanding how much of those returns and yield, we should also keep for our own operating income and basically making sure that we are investing back in the business. So still a little bit more to be done like -- as we are starting to roll out this product. But generally, the thesis is that we will take some of the interest income that we have and put it back into product engineering, servicing, providing a better onboarding space for businesses such that this volume of business tends to grow and the customers tend to grow. I think if you look at the U.K., we are one of the highest interest payers right now on assets. And then we are opening up more ways you can earn returns also. So we have the interest asset product, which allows you to put their money to treasuries. The best part of that product is that it's instant access. So it's linked to your card as opposed to if you kept money in your savings account in Barclays and then had a current account, you have to move money, which would usually take a day to move money to be usable. Here, this product value investing in treasuries is linked directly to your card, and you can instantly have access to those funds. So some of this is like very at the forefront of basically what a current account should be doing. It should always be doing this, but you're getting better returns now. So these things are also driving deposits to come.

And maybe it's worth touching on kind of some of the benefits that you see more balances being within the Wise ecosystem have. Does that presume help in terms of speed to execute, cost to execute that you kind of have them within the ecosystem? Is that the right way to think about it?

Yes. I think the biggest advantage from a customer perspective is the network becomes more valuable, right? So suddenly, you have instant payments as an expectation for more and more payments, right? Because if I have funds already on Wise, I can instantly convert. I can get the best rate at that point versus like if you're moving, let's say, GBP 250,000, and you have like do it in 10 tranches because your bank will only allow you to pay in GBP 25,000. So you know what conversion rate you'll get. You will basically be able to predict when the delivery of the funds will happen. And if the person we're paying to is on Wise also, all of that is in a ledger entry in one database. So no correspondence needed, all of that is done and you get on eith your life. So I think that experience becomes much, much more valuable. And then for us also, from a management and liquidity perspective, we don't have to wait for managing different parts of money for that transaction because treasury is easy. The funds are already there. We are instantly converted. There's no FX exposure. So like this becomes easier to operate, but also cheaper to operate.

That makes sense. And I guess, I think you've kind of alluded to it, and you've been pretty clear more broadly around the desire to reinvest both from a kind of the operating leverage on the kind of core business of the FX business, if you like, and then also to kind of give back an element to the benefits from NII. So I think there's maybe some confusion or misunderstanding around whether or not why it has suddenly gotten this NII tailwind that is then cross-subsidizing and kind of overinvesting in the core business. Can you maybe just help clarify that and kind of, I guess, confirm the fact that you still are maintaining that level of margin built in, and there's no cross-subsidization?

Yes. So we basically think about building -- we've always talked about building Wise as a sustainable business in the long run, right? So yes, we, right now, have this tailwind of interest income. We don't believe that this is going to be true, if you look at a 10-year horizon, a 15-year horizon. So we're not going to get hooked into this interchanging...

Every day at the moment.

Yes. So do we believe that the interest income is here to stay like above zero for the foreseeable future? Yes. Are we investing some of that back in the business? Yes. But fundamentally, nothing has changed in our pricing per se. And also, we are not hooked in the sense that, yes, sure, we are investing some bits of that income into product engineering, right, which we believe will give us a return on investment pretty quickly versus switching pricing very quickly on our customers right now. But if we had to be, we are [ switching ] pricing pretty easily, and we've done that over and over again, historically, too. And I actually don't think it's any different than major banks, like the banks also taking up interest income and they invest back in the business. So actually, we are giving the return back, and we are thinking of keeping a very small sliver, which will be our operating investments that we would be doing.

So kind of conscious around doing so -- doing it in a sustainable way?

Exactly, yes. So fundamentally, we believe that -- as a management team, we talk about this quite a bit, like we don't want to be in a place where if interest income [ can ] wait tomorrow, then why is it suddenly not profitable or not sustainable?

Yes, that makes sense. And maybe just on the kind of topic of reinvestment. From your kind of CTO role, maybe you can talk about some of the areas in which you're most excited around investing in and kind of lead that into the product roadmap and kind of where what Wise might look like in 1, 2, 3 years' time.

Yes. So if there's one thing I want you all to take away, if you not heard me or others say this from Wise, is, Wise definitely is -- the core competitive advantage we've built is the infrastructure. Payments is an infrastructure business generally. Like whoever can run the infrastructure at scale, should win because that will lead to economies of scale, lower costs, faster payments and eventually more volume coming in because the experience that you build on top of the infrastructure is way better for consumers and businesses. So then our biggest investment continues to be increasing our depth in different countries, so connecting to local payment systems. So we now have access to the Australian payment network. We are one of the first nonbanks to be given this access. So we are directly integrating there, which would mean instant payments for all Australian transactions in and out and also settlement that comes with Royal Bank of Australia, which means lower costs. But then also -- and we'll continue to do this, we'll continue to invest pretty heavily, like we have done over the last [ 12 ] years now, on continue to expand and deepen this infrastructure. The other thing we are doing is we are taking the products that we already have in certain markets, like the assets product, interest assets and moving that into -- enabling it for more customers across the world. So you should start seeing -- we just announced that we have now had the license to -- licensed product in Europe. Also, we'll bring into Singapore, hopefully, since the U.S. So that also makes this Wise Account more relevant to more customers across the world. And the final investment that we're doing, doing mobile. Like generally, I would say, the thesis is around Wise Business. Like I said, businesses are pretty poorly served, SMBs are pretty poorly served by most banks. $9 trillion moves across borders just by SMBs every year. And we think that's a very big pie that we can help [ build ] a great product for. And that doesn't mean just the infrastructure play, but also like the software layer on top that SMBs need and use. So whether it's receiving in different currencies, having local account details, invoicing functionality, integration with accounting software, expense management, enabling you to have multiple user access so that you have controls and who can spend money there. If you're a 20% team, you have a sales team on the ground where they're going to use the card, where they cannot use the card, how much limits you have. All of this is like business banking software, I would say, which is not usually present in most banks at the SMBs bank.

And you mentioned the infrastructure. Maybe we can dig in a little bit on that and kind of specifically where you see why is this infrastructure differentiated, both from a -- versus traditional banks, but then also versus kind of maybe more modern players like Revolut or a currency cloud. Kind of talk about kind of where you see the real moats.

Yes. So I think for most banks, who still move most of the money around the world, they're still using correspondent network, right? So corresponding network, the problem is basically, depending on the number of legs in the transaction, you can't predict how fast and how slow transaction will be. So it's a pretty poor experience. So usually, you'll go and you can see, if we do a transaction, it will -- the delivery estimate will be 2 to 5 days. In this day and age, when my son can predict when his toy will come from Amazon and what time the doorbell rings, like 2 to 5 days for money to arrive on the other side of the world is pretty crazy. But then also, the number of correspondent hops you have, that determines pricing and how many people are touching the funds. So generally, I think corresponding -- most banks are still running SWIFT in the correspondent networks. We have a very different strategy on this, where we have built a network which connects directly to local payment systems. So then if you're doing a transfer from, say, money movement from USD to AUD, we just use the domestic rails to get the funds in to Wise, which is domestic rails are cheaper and faster, and they're getting cheaper and faster every year. And then on the other side, so in USD, you'll use ACH or maybe Fedwire to move money in and then we turn around and push the funds out through NPP in Australia. That's basically -- so there's two legs, Wise is in the middle, no middleman, that's how we can drop fees. I think it's a very unique network. And yes, others have tried to build this and people have done it, but not at the scale that we have now. So there are some places, say, in Singapore, who have done this for like connecting to Thailand or India corridors, but not globally, or some people in the U.S. who have done it to connect to Mexico or to, say, Philippines, but not globally and the scale beyond. I think -- and the more we do this, the better we get at it, the better access we get to the rails in every country. Because one of the other things that people sometimes don't realize is this is a pretty learned skill to do direct connections. Direct connections are not just technology plays, they are a regulatory play, too. So if you're a central bank who manages and runs and regulates the scheme that moves money around the world in the domestic -- sorry, in the domestic market, your biggest thing that you are worried about is financial stability. So banks have access to the schemes. They do payroll. They have money mostly being done through them in the local market. But then nonbanks when they get access, it's not like a given. You have an exception-based use case. And when we go and have these conversations with central banks, our track record of running these schemes are connecting directly to them, gives us a much bigger edge because we can show them that we've been doing this for a while. So if there is a probability that somebody is going to get access, it is usually, we are in the consideration set more and others. From a [ related ] perspective, that's the biggest hurdle. And then you have to deploy the technology and [ at-scale ] on the ground usually because that's what the requirements are. So building data centers and stuff. Finally -- so that kind of answered the question a little bit on like the newer competitors. So if you look at, let's say, revenue, revenue is a great business, I think they're doing amazing stuff, but they're more focused on -- initially, we felt like we were more in the collision course back in the day when they ran FX as a loss leader, but now they charge for FX. They've realized that you just can't run that as a loss leader anymore. But I feel like they're building more of a holistic domestic account maybe in some other countries, too, but primarily focused here in Europe. But like we are not looking to add on more and more features like phone insurance, travel insurance and stuff -- like more of domestic use case. For us, cross-border is the biggest use case and whatever enables you to have a great cross-border account. And then our investment is more in the infrastructure, where I think they're still running -- a lot of players are still running on layers, basically, to other providers, some of whom use us. So that's basically the [ white stack ] play.

Interesting. And I guess kind of one of the benefits as you get bigger, more scale, you see more volume, better data, you can then kind of leverage that to kind of have more transactions take rate on us or -- to be netted. I'd kind of love to hear a little bit more about how you're approaching that from a kind of treasury management point of view, the technology there. Just got back from our TMT conference in San Francisco, AI and machine learning, I like the key, key themes. So really interested to hear how and [ what ] is your thinking about that.

Yes. So we've been investing in machine learning for a long, long time, given before -- like in public, we talked about this, too. Our treasury system, I think, is one of the most sophisticated systems and the scale of company we are and we've built. There's a few advantages we have. So number one, compared to a lot of banks, our technology is closed loop in the sense that the entire network, the treasury system that we built on top, has access to all the data in the network versus -- I'll give you a comparison of HSBC, for example. The Hong Kong HSBC technology stack would be very different than the U.K. one. So if you're trying to put a treasury system on top of that to understand the flows, you have to like figure out how to connect all the data into one system, which is a pretty big technology task to do, and it's sounds easier than it actually is. So for us, that is a big advantage of like knowing where the inflows and outflows would be and then predicting and building algorithms on top of that. So about 50% of our treasury is basically -- treasury trades are basically machine-learning [ objected ]. So we actually, on a Friday night, going into a Friday night, would know how much liquidity in INR, for example, where the market had opened earlier than here, do we need to make sure we can continue to pay out when India opens up and have a great experience, right? And that prediction and that ability to basically have the data to be able to act on it is like a huge advantage we have. The other bit, as you said, is as a Wise Account grows, and again, the network gets bigger, then this prediction requirement goes lower, right? So we can net off transactions. We already have the liquidity, so we don't have to [ front ] anything. So those things happen within our ecosystem. And the experience is still much better because if you're on the other side of Wise customer, too, then you basically have instant like -- even when banking hours are not open, doesn't matter because we can settle your transaction immediately on Wise. So it's just a much better experience. And as we get more and more Wise Account option, I think that scale effects will come into play and experience is going to get much better.

That's really interesting. And I think kind of thinking back to the time of the listing, you made the point that all of this results in faster speed to execute, lower cost, and that drives much higher NPS scores and kind of virality around marketing. And I think at the time, it was 2/3 of customers are through word of mouth. Maybe you can give us an update as to kind of what you're seeing there? And is there any thought to maybe almost push a little bit harder on that, right, because you could potentially accelerate the customer adds [ excel ]? So just kind of keen to hear how you think about that.

Yes. So like given our customer base and the scale at which we are adding new people, like the numbers are the same. About 2/3 is all coming through organic growth, as we call it. We do fiddle around a little bit on like trying to understand what should be done. We don't experiment sometimes on like marketing payback and stuff. But generally, most of our customers will keep within -- our investments, we keep within 9 to 12 months of payback, and most would pay back less than 6 months, in general. Sometimes we experiment with some business corridors. We may say let's try and break it a little bit, that's what we call test budget. But generally, we still feel to run a profitable business and at the rate which we are growing, the underlying thesis of continue to invest in building a great product such that people have higher NPS and then they drive virality, that's the best way of growing the business basically.

Understood. Maybe switching gears a little bit, but I know it's kind of -- it's on investors' minds. Just in relation to SVB, I know there was kind of a statement or a blog post put out, but kind of was interested to hear in one of the meetings we just [ saw ] in. Prior to this, how actually -- what you saw in terms of kind of demand coming for opening new accounts? Maybe you can kind of share some thoughts there.

Yes. So just on the technical side, like from SVB perspective, Wise, we had like no customer funds and no customer deposits on SVB. You had like a very small, like payroll account that we used to pay our U.S. employees. That was there. That's also obviously taken care of because it's -- the deposit side is covered. And when we had an RCF with 7 banks and one of them also with [ SVB ], but just generally, that's our -- that was our exposure, generally, just very, very minimal. But then if you think about what happened, so we had our Board meeting on Thursday and then we're sitting at dinner and suddenly, a bunch of our cell phones started ringing around the table and, they were basically some founders, some venture partners, either WhatsApp-ing happening or texting or like calling and asking how quickly can we get some of our founders of companies and account. And what was pretty clear was the reason why they were reaching out was, obviously, there were dire straits distress for quite a few folks. But generally, when they were going to larger banks, the wait time could be 2 to 4 weeks to open a Barclays business account due diligence on KYC. We could open a track where we had a deployed team with an e-mail address to say, "Hey, tell us which one you are from, who you got to contact from, how much money are you going to move? Is there a document you need? Send it to the email address and then we may have somebody call you back, right?" So we can basically onboard businesses pretty quickly. Some businesses got onboarded in 3 hours, right? Now it's not because we are better in onboarding and being clear on like how we want people to onboard, we have the same requirements as well as banks. But I think the founders were vested because they were an urgency to make sure they got an account. So they had all the docks ready, they already had their venture partners on the phone, say, "I need you to give me your KYC documents and whatever." So it's a pretty interesting time, where usually something that would even for Wise may take 2 or 3 days, was like done in like a few hours because people are incentivized to get things moving fast. People ask me, "Okay, so how much inflows? And what do you think about the impact of the business?" I think generally, it's still [ 4 ] days in, right? So did we see Wise Accounts open? Yes. Do we think this is going to be true and everybody is going to continue to like have this account and put a lot of funds with us? I don't think so. Some of this will flow through and potentially end up being part in somewhere else. Some of them may be, for the first time, discovered Wise and understand the features that we've built, and they go, "Oh my God, this actually helps my business very well. Maybe I should make the primary account." We don't know yet. I fundamentally believe that if you are a business that has a lot of cross-border needs, then parking your funds or some of your funds in Wise Account will probably make it much easier to operate. But I had a founder who I invested in invested, too, and like 90% of their funds was stuck in SVB. So thankfully, they're [ not our ] business right now. But like generally, what is he going to do now? He's going to open 3 or 4 accounts and park the money all over the place, right, things that people didn't think that they would have to do. So some of this will flow through and some of this, I think, will be an uptick, where people will see Wise as an operating account, but it's still too early to tell.

And are you kind of thinking about -- I know you don't lend out any money, right? So funds are back to one-to-one. Is that something you can almost maybe be in a case and kind of [Indiscernible].

Yes. I never thought -- so like we had questions from businesses that we never had before. Like "Okay, so how do you make sure your funds -- the funds that keep [ Wise ] protected?" And so we had to explain our safeguarding regime. The blog post has been out for a long time. What safeguarding means? It means we don't lend money. We're not allowed to lend money. We've given a license. The one-to-one all customer funds have to be parked in separate accounts from company accounts in the different accounts. So like we park them in Tier 1 banks, like whether it's JPM or Goldman or whoever else, and then also some in treasuries. So what we did then? We put out new blog post explaining where we park our funds. Depending on the regime you are in, if you're licensed in the U.K. as a business, then you will get certain holdings. If you're a license in the U.S., then you get certain holdings. But I think it is pretty interesting how suddenly everybody was like trying to get under the hood to understand where the money gets parked. And then we also have launched this interest assets product, which is basically parking your funds into a money market fund and backed by government bonds. So actually, that's the best product we think people can use because then you don't have the exposure to banks either because you're parking money with the government. And then we give you a very short-term liquidity on that. So it's actually been a pretty interesting learning for, I think, quite a few folks, who never asked these questions. But on our headline, yes, we don't lend. So we don't create leverage in customer deposits. So one-to-one, we have all the funds to pay back in liquidity -- liquid manner.

Great. And maybe just on the broader competitive landscape, maybe you can lay out kind of what you see as like why is the share currently across maybe personal and business. And I guess, more importantly, where you're seeing clearly with the growth rates of 50% plus volume growth? Where that those share gains are coming from?

Yes. So I think we are around 4% on overall consumer market share across the world, much bigger in the U.K., of course. We started here earlier, I think here, like way above 10%, 12%. I don't exactly remember the number in the U.K. Market share numbers can also be very hard to explain. And then on SMBs, the market is so big, like $9 trillion moving across borders for SMBs every year, as we are like less than 1%. So that's where I think we have a lot of growth still left. That's why we're investing a lot there to build a much better account experience for people to be able to make it a primary account for them. Yes, I think that's basically it.

Understood. And I'd also be keen to hear a little bit around the hiring environment. I think, why is clearly still in growth mode? See your LinkedIn profile, tells people you're hiring. You're probably one-to-one of the few fintechs that is still in that kind of growth mode and adding headcount. So it'd be interested to hear what you're seeing in terms of kind of the war for talent. Is that easing compensation, things like that, particularly for you within your engineering...

Yes. So my biggest line item in engineering and product budget is salary, right? So competition is a big part. Generally, I would say -- so we've always -- again, the thesis has been the same, whether it's about customer pricing or how we think about profit margins as a business or investing in our talent and the team that we have. We historically even during COVID, we could have grown faster, but we kept our margins the same. We grew sustainably. So we have not changed actually anything. I think other companies have changed what they're doing. We are operating in the same way. So we've been profitable since 2016. We'll continue to be profitable, and we'll continue to invest in the longer run. So that's why we have not done anything drastically different. I think it is other companies who took a very big investment and thesis that this gravy train in COVID is going to continue to be there, and they over-indexed, and now they're having to deal with the repercussions. And I think Adyen, like I know [ Ingo ] pretty well. It's kind of a similar mindset that they have. And actually, from a market hiring perspective, things are a little bit better. I think good talent will always find a home. Good engineering and product [ hand ] will always be in demand. But I think there's a little bit more -- it's a little bit better and easier hiring environment from a perspective of less competition and less crazy counter offers that were happening last 2 years. And also people are looking more thoughtfully on this company that I'm joining, will they be around for the next 2 or 3 years? That are profitable, then why should I like -- are they sustainable? Will I have to change the job again in 6 months? So I think those things have made easier for us to hire. But I wouldn't set expectations that comp has dropped through the floor or something like that. No, like maybe the growth in comp has slowed down for a bit. We'll see how that goes. But last 2 years, comps gone up quite a bit for most good talent in the tech space.

So still kind of seeing how it plays out?

Yes.

And maybe one last one for me before I open it up for questions. Can you talk to us a little bit more about the Wise Platform business? I know you mentioned it in the intro, kind of what exactly it is, how big the opportunity is and kind of maybe any traction in wins that you've seen over the last couple of years?

Yes. So Wise Platform is growing pretty quickly, but it's still a smaller portion of our overall volume in overall business. This is a very long-term play that we're investing in. But yes, we've had some good wins. So last year, which was the end of the calendar year, we basically now have cornered the market in the U.S. around business banks, who you would go to as a new business. So whether it's like business [Indiscernible] banks like Mercury ramp, Brex and others, like they're basically all -- like there's only a few headline banks you can go to. And all of them have now switched their plumbing to Wise and using the Wise Platform and the APIs we have. Similarly, we are now starting to see more traction from established banks. So we just went live with the Bank Mandiri in Indonesia, which is the largest bank by assets in Indonesia, second largest bank overall volume. And we're seeing more and more of these conversations getting easier. So in our earlier part of our journey in Wise Platform, it was much easier to say to a bank who didn't have any cross-border, say, "I would integrate with SWIFT, here's an API way better, much better integration, easier to manage and better experience, use that." But now we're starting to see some players who were always SWIFT-first starting to change and integrate with us. So still early days, but like the momentum and the direction seems pretty promising.

What -- how do those kind of conversations go with, let's say, more traditional banks? Like, are there any sticking points in those negotiations? Because obviously, on the one hand, you're taking share maybe on the personal side, and you're looking to work together on the kind of B2B or enterprise side on a white label basis. And also kind of, I guess, any tensions there, basically I'm trying to get out.

So actually, it's the same discussion. So if I go to a bank in the U.K., it's the same customers, we share customers, basically, right? For certain transactions, they're choosing to come to Wise. For certain transactions, they're sticking with the bank, right? So our pitch is like this is not an enterprise discussion. It's a consumer discussion. We just have the same customers. Now would you rather have them do those transactions where they're banking with you? And then, is this powered by Wise? Or would you want them to continue to move over, right? And interestingly, actually, depending on the region and the country and the bank, like usually, people switch when these savings becomes big enough. And the savings becomes big enough to open a new account and go to a headache of setting up a new account when the volume or the number is big enough. Those are the customers that banks want to keep and not lose that volume, right? So it's a little bit of like actually, it aligns pretty well with the business. And then I think what 2 or 3, 4 years ago, maybe most banks never thought that we'll get to the scale, that we could keep this pricing and sustainability on this. Now I think the -- a lot of them are realizing that this is actually working. We have profitable business. This is not going to go away. So then question -- becomes the question is, how do they build that moat? And do they build that moat by defending? Because the other problem they have is you also have neobanks. The neobanks are coming and going, like, "I want those customers, too. And I want -- I'm all integrated with Wise, and I already have a better experience, and my convenience factor is better." They're kind of getting hit by both sides. So then it makes the conversation easier to say, "Actually, it should be powered by Wise. And guess what, we'll do some rev share because some of the things that we -- don't need to do anymore." If you're onboarding you to Wise, we'll have to pay for KYC, checking certain documents on you, all of that stuff and maybe CS call volume. We may not have to do that if you are a bank customer, so we'll give the savings back to you. So I think it's resonating more. Obviously, there's a lot more challenges like some of the banks, they have a lot of legacy infrastructure. I met a bank CTO recently, a CPO, they were like "We release our mobile app once every 6 months." So forget about changing the integration and using an API, like it's a certain lot of -- the 100 rate that is very, very high on the amount of investment you have to do. So those are some of the challenges they also have. Even if they want to move, it can be pretty challenging. So we have to help them.

That's helpful. Maybe I'll stop and see if there are any questions. Yes, we got one here.

Just following up on the Platform question. Is there any risk when you enter into those agreements with banks that you have some residual liability if they haven't done their KYC properly?

Yes. So we still have to do all the checks as we are part of the funds flow. So we have to take the documents the banks have. We will run our own algorithms and our own checks on them. And if there's something lacking, then we have a process to go back and ask more from the customer. And then depending on the contract and the integration, it could be the bank asks or the customer knows we are -- in sense we can ask. Generally, it's the banks interface [ checks ]. So regardless from a regulation perspective, everybody in the chain has to do their own checks. So that's not really a big thing.

Great. And I think we have one more just on the back.

Jack [ Moore ] from Italy. Very happy Wise customer since 2017. But two questions. The issue of where our money is, I think it's key. You're not a bank, so there's no deposit guarantee. So how do you choose your partner mix around the world? And the second question is also to look who is sending the money to who, and why is a key issue. We know some of your competitors have had problems on this side. And so what's the policy there, please?

Let me hit the second one first and then I'll hit the safeguarding it. So yes, I think everybody, as I said, right now has to do their own due diligence on the sender, receiver and the funds flow in the middle. So actually, if you compare providers, it is just based on like how good they are doing this. So like we've had a very good track record on this over the last 11, 12 years, and like we're very confident on our fincrime engines that we've built, including the amount of investments we've done around machine learning also and using technologies that find pattern, even like when there are people who are trying to work through networks and stuff and we can find those patterns pretty well. And we -- again, going back to the -- we have the global view on the data. So all the data feeds into one place, it's easier to train these models. And then we have a human who reviews everything when things are flagged. On the safeguarding aspect, actually, the question I would ask, and this is a question that most founders are asking recently after this issue, what is insurance after a certain amount? So maybe for consumers at the CS at 85,000, that's okay, it covers a lot of consumers. If you're a venture-backed business, 85,000 is nothing, like my founder who e-mailed me, who I invested in at 40 million stock, most insurance. Our standing, and this is why we're publicly right about this, is, yes, money is parked in these like Tier 1 banks, but also money is parked in treasuries, money is parked in government funds. And also, we cannot lend. The creating of leverage is the problem. So if you cannot create leverage from a license perspective, then actually one-to-one availability of funds is much easier. But we do have a lot of our funds in top-tier banks, but also short-term treasuries. And also, we do due diligence on those banks. Hopefully, it answers your question.

Great. Thank you. I think we've just run out of time. So Harsh, thank you so much for joining us. Appreciate it. Thanks everyone.