Fintech company Wise integrates with SWIFT, what it changes?
One of the major news in the fintech world today is the integration of Wise with international payment network SWIFT. The company's history begins in 2011, and over this time, fintech has grown significantly and had a substantial impact on lives of businesses and individuals. TransferWise, as the company was previously known, has long been and continues to be a strong player, providing virtual accounts to populations of many countries.
The main competitive advantage was based on favorable exchange rates and borderless transactions. Wise clients can send and receive transfers almost anywhere in the world. However, the dependence on banks for fintech products, especially EMIs (Electronic Money Institutions), often hindered their growth. Traditional banks saw modern fintechs as competitors and did their best to stifle their development. Many traditional banks refused to provide services to new fintechs, offered unfavorable terms, and frequently closed accounts. Finding a stable account as an EMI is truly not easy.
On one hand, we understand banks' concerns, given how many modern fintechs close down, as recently happened with EMI Kevin. Banks do not want to take on such risks and avoid collaborating with newly minted finance companies.
On the other hand, another aspect of this process is clearly visible too — fear of losing market position, monopoly, payment volumes, and the number of clients. It's easier to fight the competition than to develop a better product. For most state-owned and even large private banks worldwide, ensuring the quality of online products is difficult if they haven't done it before. This requires funding, hiring new personnel, and constantly improving service. And that wasn't really planned by most of financial institutions. Previously, to be a stable and popular bank, you needed a large capital and a strong market position. Clients chose a bank to open account based on these criteria. But today, physical stability in the form of branches is not as important to population as convenience of online banking and remote transfer services. Here, modern online banks have a huge advantage, and direct integration of Wise with SWIFT literally demonstrates a new market trend and a shift in leadership towards digital technologies.
Now, financial institutions will have almost the same functionality and market position as traditional banks, meaning they can pose real, serious competition. This might lead to the loss of positions by weaker banks that cannot keep up with the pace of market growth. Read more news analysis and articles from our authors in Mono Talks section.
