Transferwise, a UK based global payments and transfer platform that has emerged as a leading stealth bank, will see its valuation hit $5 billion in a funding round that is said to be nearing completion.
According to a report in SkyNews, Transferwise is set to raise $300 million in a funding round that will also allow some employees and early investors to cash out of their shares.
The Fintech unicorn last raised growth capital in mid-2019 at a valuation of around $3.5 billion. That funding round was led by Lead Edge Capital, with participation from Lone Pine Capital and Vitruvian Partners. Ongoing investors Andreessen Horowitz and Baillie Gifford & Co were said to have increased their stake and BlackRock also joining in on the round.
Transferwise claims over 8 million customers that utilize their services to transfer more than $5 billion each month. The Fintech popularized their service by providing simple, low-cost money transfers at real exchange spot rates. The Fintech had an easy target though, as traditional banks have historically gouged customers with excessive fees and outlandish exchange rates that border on the criminal. Once a user compares Transferwise’s service to their bank – the decision is simple. Meanwhile, banks have been largely unable to compete removing the thin varnish of necessity for individuals and businesses in need of transferring money.
Over the years, Transferwise has added new services such as multi-currency accounts and debit cards. A multi-currency account is free whereas big banks typically charge high fees. Free ATM withdrawals are part of the platform’s offerings.
Recently, Transferwise announced it had received Financial Conduct Authority (FCA) approval to offer retail investment services. The UK is first on the list but you can expect the service to expand across Europe as well as other jurisdictions. This key step is a solid nail in the coffin of incumbent banks.
Transferwise is a truly global operation with 14 different offices around the world, employing more than 2200 individuals.
In many ways, Transferwise is the bank of the future. Borderless, global, providing services at a very low cost minus unnecessary real estate – at scale. The new funding should help fuel this stealth bank even further. As for any indications of an initial public offering (IPO), Transferwise has been cool on the idea in the past as private growth capital is abundant and the cost of a public offering is excessively high while mandating ongoing fees.