Global financial barriers continue to break down
Cross-border currency transaction company TransferWise has secured an additional $26 million in funding, cementing its status as a unicorn–a privately held, venture-backed company worth more than a $1 billion. The implications of this valuation stretch well beyond currency markets.
TransferWise allows for collaboration between buyers and sellers of currency in multiple countries. By matching them and verifying available funds on both sides, TransferWise enables both parties to circumvent heady fees levied by banks and traditional money transfer players like Western Union.
From a technological perspective, TransferWise isn’t doing anything revolutionary. Bitcoin’s blockchain technology for example is much more advanced. TransferWise’s gift is the ability to enable collaboration at a platform level. By directly connecting both sides of the transaction, participants are able to circumvent unnecessary costs. For procure-to-pay readers, this is tantamount to eliminating supplier fees. Nothing to pay for beyond the buyer’s use of the platform.
The Tradeshift team had an opportunity to host a debate between Taavet Hinrikus, CEO of TransferWise and Ann Cairns, President of International Markets for MasterCard, moderated by TechCrunch this year in Davos. The video is below:
Hinrikus’s points regarding the hegemonic nature and languid pace of innovation in the banking sector bely a broader trend. Traditional, staid companies are at risk of disruption. One of the most powerful forms of this is to enable real-time collaboration across a platform. Of course, legacy players will retain some market share. At a corporate level, some buyers are too timid or risk averse to embrace the growing category of agile solutions. But for companies who know old technology and process won’t cut it, the time to act is now.
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