Simon Taylor, an experienced Fintech strategist, notes that the latest Fintech results season is witnessing Wise (LSE:WISE) really “hitting its stride.”
As HSBC competitor Zing launches, Wise revenue is “up 23% YoY and its above its IPO price.”
Simon Taylor has examined why Wise revenuers might be increasing.
He noted via LinkedIn that Fintech Wise revenue has reportedly “reached £276.6m ($350m) with more than 7.5m consumers and 400k business customers.”
Taylor added that customers are “up 30% YoY, and interest income (net of consumer benefits) is up 126% YoY. Core fee revenue is also up 40%.”
According to Taylor, there are two types of companies “in this interest rate environment: those attracting deposits and those losing them.”
Fintech companies like Wise are “attracting them and benefitting them. Big banks are seeing the opposite.”
He believes that Wise is benefitting “from a rise in interest rates.”
Taylor pointed out that years ago, a cynical banker would say to him, “They’ll never be profitable, especially when interest rates get back to normal.” Wise pre-tax profits “were £180m last year, and they’ve benfitted much more from rate rises.”
Taylor claims that Wise is “a beneficiary of the freelancer and remote working boom. The amount of people who work across borders is increasing every year. SMBs and business customers have much higher balances and move larger volumes.”
The Wise take rate “is ~0.90%, so the higher the volume, the more they win.”
As covered, Dwayne Gefferie, a strategist helping payments companies with scaling operations, had commented on why he thinks UK Fintech Wise and Revolut need to take HSBC‘s new initiative seriously.
According to Gefferie, if HSBC‘s announcement of their new venture Zing teaches us anything, it is “that no one is safe, no matter how big you think your moat is.”
Gefferie pointed out that during the past decade, the United Kingdom has been the “breeding ground” for the majority of “successful” Fintechs, including Wise, Revolut, Monzo Bank, Starling Bank, GoCardless, among others.
Oftentimes, such initiatives are “ridiculed” by the larger banks or those who have been working in Canary Wharf as little startups who will end up being bought by the bigger guys once they have burned through the capital they have raised.
But sometimes, Gefferie says that startups actually make it and can become “a thorn in the side of established banking society, so much so that they have to fight back.”
He claims that the same is the case with Zing, an HSBC venture that is set to debut as an international payments app, directly challenging “the dominance of Fintechs like Revolut and Wise, who have grown to have tens of millions of accounts now, and grown globally.”
