Austin, Texas is a long way from Estonia. It’s also a very different place compared to the Baltics. Just consider the climate. Last weekend it was 32 degrees Celsius (or almost 90 degrees Fahrenheit) in the Lone Star State and it’s not even spring in most places in the northern hemisphere. Wise launched in the United States in 2015, but in 2021 the global payments leader added an office in Austin. Augmenting the existing offices in Florida and New York. An office that is strategic in many ways. Strategic in that it has access to the growing talent pool arriving in the state capitol every day. Strategic in the way it is located in the U.S. – Mexico remittance corridor, and its proximity to the rest of the Latin American markets.
Two friends from Estonia have been able to build a lasting and sustainable business. In a very competitive market. Just consider the first impressions that consumers in the United States had of the company:
The global economy is recovering from the COVID pandemic. People are travelling in record numbers again. And businesses are in need of more flexible ways to pay remote workers sometimes scattered across the world.
Globally tech firms have been laying off talent. Some of them have had their valuations questioned. But fortune favours the brave. And the Wise, in the case of Taavet and Kristo.
Wise has backers such as Peter Thiel (PayPal), Richard Branson, Fidelity, and Andreessen Horowitz They are not the only ones to have seen the opportunity to solve a real problem for consumers.
#DisruptionBanking wrote about the payments leader in 2021:
Is it Wise to Invest Big in the U.S.?
“People don’t join a company. They join a mission.” Kristo Käärmann, CEO at Wise once said.
Interestingly, just as I was speaking to Balazs Barna, Austin Site Lead & Head of U.S. Engineering at Wise, a story was evolving in California.
Whilst the story about Silicon Valley Bank’s (SVB) demise has hit headlines, Wise appears to be unaffected.
In any event, commentators are suggesting that SVB is a ‘very American mess’. And it is unlikely to impact the growth of Wise’s U.S. business. Which, Balazs told me is now the biggest market in the world for the payments leader.
In Wise’s Half Year 2023 Report there are several mentions of the importance of the U.S. market. Wise USD Account connects to over 6,000 finance apps like Venmo & Chime via Plaid. There are now debit cards for U.S. businesses and the firm has introduced ways to accept card payments for invoices.
From StartUp to Opening a Full Stack Hub in Texas
It’s early days yet for Wise’s operations in the United States, but things are already looking very promising. Balazs sat down with me in person in the Austin office of Wise to tell me more. More about the huge step from Budapest to Texas. And more about the opportunities for growth that Wise is experiencing in the U.S.
The decision to invest in Austin came in late 2021. And Balazs was given the task of setting up operations and onboarding the initial team. A team that has grown significantly since the first office of Wise opened in late 2021.
Balazs has been tasked with building a state of the art, full stack, operation in the Texan capitol.
The company has matured since its early days of provocative marketing slogans. However, Balazs assured me, Wise holds true to its roots. It is a dynamic, agile, and extremely transparent business.
International Payments as a Service
Since the business started to roll out across North America new partnerships have been forged. One of these partnerships is with Stanford Federal Credit Union.
There are 9,600 credit unions in the U.S. today, many of whom are not able to offer their customers quick and cheap currency transfer options. That is all changing as Wise continues to find ways to help consumers get a better deal.
Balazs explained how in the U.S. Wise is offering a solution for banks and credit unions to move money, not in 3 to 5 days, but in 20 seconds. “We will manage your international transactions because it’s much faster.”
He explained that financial institutions see Wise as a partner and not as a competitor. Wise already has many international licenses in place, mitigating the need for these financial institutions to build this network themselves. The most forward thinking of these companies understand that Wise is solving a problem for them. A problem that means that their customers are less likely to move to a different bank.
As an example. When Wise launched the integration with UK challenger bank Monzo, the process only took three weeks.
That’s not all. Google Pay is another partnership. Since 2021 Wise has been increasingly selling its platform as a service to banks around the world. Now Google has also staked its intent to help customers get a better deal by expanding its remittance feature into the many countries Wise operates in.
Innovation with Wise
Balazs initially worked as part of the European expansion team at Wise. In his early years at the firm one of the big challenges that he sought to overcome was the cost related to money transfers for his native Hungarians.
Highlighting how quick Wise is able to make changes and support a completely new product, Balazs explained how the Wise team had gained direct access to Hungary’s payment infrastructure, a first in the European Union for the company. The Central Bank of Hungary (Magyar Nemzeti Bank, MNB) provided the company with a settlement account, allowing it to become a direct participant of Hungary’s payment schemes.
“After we did the direct integration we were able to drop the fees by 25%,” Balazs highlighted. He also shared how this was done in about 7 months where other financial institutions were taking up to 2 years to do the same.
Another example of the way the firm are able to pass the benefits of innovation to customers at speed is the recent introduction of interest rates to customers with funds on account. In many countries at once. A process that could take a year normally, but took the team at Wise just one month.
These are important considerations for engineers looking for a career move but still considering working for a traditional bank.
“As an engineer, which team would you like to join?” Balazs asked. “One where you get to work with people who took a company from zero to £10 billion. People who started from nothing and now give consumers back £1 billion a year?
Launching in Austin with Wise
Austin is famous for being ‘weird’, something that can also be said about the behavior of Wise’s founders and their naked exploits in the early days.
But where Austin is famous for being ‘weird’, Wise is now famous for solving a problem. The problem surrounding high charges and bad customer service in international payments. And, more recently, for levelling the playing field for businesses.
Balazs explained how when he first arrived in the Lone Star State he had issues like every ex-patriate does. He didn’t have a bank account which was needed to secure a rental property. Something that Wise helped him to solve.
Wise has been developing solutions for individuals and businesses for some time now. And one of those solutions is the ability for individuals to have multiple bank accounts and access to a bank account in multiple locations across the world.
In moving to Texas, Balazs wanted to experience what it was like being an immigrant coming to the U.S. He didn’t have a credit score, he couldn’t just open a bank account. Wise basically saved him. And any other migrants looking to base themselves out of the U.S. can use this facility with the same ease as Balazs did.
International Banking as a Service
Apart from the reserve currency being the U.S. dollar there is also the small matter of 5% of Americans having a need to make international payments. Add to this the growing amount of micro, small and medium businesses who rely on paying suppliers and partners internationally. These firms are currently paying up to 3% margin and other fees for this privilege.
International banking, as it is, has been something only available to premier customers of banks around the world. Smaller businesses and entrepreneurs have not had the turnover or the size of balance sheet to gain better international banking facilities.
Even during the advent of payment wallets like PayPal in the 90s the problem was only partially addressed, Balazs explained. Today Wise offers a U.S. product linked to the Federal Reserve, it offers a UK product linked to the Bank of England, and it offers a Hungarian product linked to the Hungarian National Bank. These are just examples. Wise offers local bank details for up to 10 currencies and allows to receive convenient local payments from 30+ countries.
Wise offers all of this at the same low fee that it offers all its products. Making access to premier banking services that much more available than it ever was before.
How Austin will become a Full Stack Hub for Wise
At Wise “the magic happens when product, marketing, operations and engineering can be in the same building,” Balazs explained. As an engineer at Wise it’s not enough to just understand the code. It’s important to have a deep insight into the internal processes of the company too.
“In our office on the one side of the room you have the operations team. Who are responsible for liquidity management, moving money. They are the backbone of Wise. They’re handling most of the most critical processes in the company.” Balazs shared. “And, the engineering team sit right next to them.”
Engineering at Wise isn’t just about fixing bugs. It’s about feature building. It’s about understanding the nitty gritty involved in how the Automated Clearing House (ACH) system works.
“Our engineers have to understand how our systems were built. The purpose of the systems. How we can make them better. How we could make them faster,” Balazs continued. “We have worked on a lot of improvements here locally. Improvements that have increased the speed of payments.”
To highlight the local approach, Balazs shared how one difference between the U.S. offering and that available in other parts of the world is the way the initial customer journey looks like. In most countries customers are asked each time they use Wise how they would like to pay (bank transfer or card) for a transaction. In the U.S. once a customer makes a choice about how they pay they were confused when that question was repeated. As a result this step was changed for U.S. customers.
“We have a global product which uses the same code. But we are listening to customers locally. We understand that something that may make sense in London doesn’t necessarily make sense in the U.S.,” Balazs confirmed.
Focusing on North America
Balazs is focused on the North American market. He believes that the problem that needs solving is very big, as is the product. The majority of the core teams at Wise are still located in London. However, the Austin team shares data with them in order to better solve the problem in the U.S.
One of the reasons for the offices in the U.S. is because “what we believe in is that the people who will understand the problem best are the people who live there.” Balazs went on to share how this is why Wise has so many offices all around the world. And why he had to come to the U.S. to be part of the solution for what is the biggest market for Wise today.
Going forward the concept of a Full Stack hub like Austin will surely evolve. We discussed with Balazs the opportunities that Wise has to develop it’s offering to the Latin American markets. And we spoke about how much growth there still is in North America.
Finally we discussed how the talent available in Texas today is some of the best in the world. Each day new transplants arrive to the state capitol. Talented transplants, many of whom will see the promise and the opportunity to grow with a company like Wise.
Balazs and Wise have committed to investing in the Austin office. In many ways their adventure is just starting. Is it time you tried to find a way to work with the Wise?
Author: Andy Samu
