A company that often uses the slogan "Bye Bye Banks" has decided to say hello.
The cross-border payments startup TransferWise, which cultivated a reputation as an alternative to banks and their fees, is canvassing the U.S. for bank partners so it can reach more people who send money to other countries, says Scott Miller, the vice president of global partnerships.
"About a year ago we realized that not everyone is going to come to TransferWise to transfer money," Miller said. "So, wherever they are going to make transfers, we should go to them."
TransferWise promises consumers smaller up-front fees for wiring money to foreign countries, and more transparency about the foreign-exchange rates it charges. It has struck partnerships abroad with upstart, all-digital banks; in February it announced partnerships LVH in Estonia and Number26 in Germany.
Its approach in the U.S. is different because the landscape is different. The U.S. borders only two countries, but it is one of the largest remitters, with transfers between the U.S. and Mexico being the largest in the world. And there are really no upstart, or "challenger," banks the way there are in Europe, but there are nearly 6,200 banks here, with many grappling with how best to approach the future.
Miller said the company is casting its net wide. While no deals have been struck, he said he is having conversations with banks of all sizes, with each asset class having its own potential uses for TransferWise's technology.
There are the big banks, and that sort of partnership would make obvious sense for TransferWise. It would give the company immediate scale, something that many fintech startups hunger for. Of course, those same banks may be uninterested in disrupting their existing business models.
While observers say the money transfer incumbents are likely not worried about disruption, Miller likens that mindset to how the telecommunications industry initially reacted to rival technologies like Skype.
Miller worked for Skype in business development from 2005 to 2013. TransferWise's ties to Skype are deep — Taavet Hinrikus, a TransferWise co-founder, was the first employee at Skype.
"We talked to carriers for years about how we could enhance their business, not just take away their revenue streams," Miller said. "But fintech is sweeping the banking industry much faster."
Miller added that he is "inspired by the number of larger banks wanting to talk to us."
"They see fintech coming and don't know where it is going to eat their lunch, but some are deciding where to embrace it," Miller said, echoing now infamous comments made by JPMorgan Chase Chief Executive Jamie Dimon, who in his annual letter to shareholders last year warned that Silicon Valley was trying to eat the banking industry's lunch.
Regional banks might be a particular sweet spot for TransferWise. Few see foreign money transfers as a profitable business line; the ones that are in the business are often doing it to serve their customers who ask for it.
"It may not be a moneymaker for the bank, but could be a good supplemental product," said Sam Maule, the head of digital and fintech for NTT Data Consulting. Maule focuses on financial services and insurance.
Small, innovative banks, the type that already have several fintech partnerships, are also a possibility as they look to build out their product offerings.
The development is perhaps surprising. Besides using the "Bye Bye Banks" and "Bye Bye Bank Fees" slogan, TransferWise organized a guerrilla marketing campaign early last year where it led people on a run through Manhattan in their underwear "in the name of transparency."
That type of messaging has not stopped, either. Just a couple of weeks ago in announcing that it has opened up payments between the U.S. and Mexico, it suggested that banks were charging high fees relative to their costs and hiding the markup on exchange rates.
Fees for "international money transfers are far more expensive than banks let on," the company said in a press release then.
But despite all its buzz — the company is backed by high-profile investors such as the venture capital firm Andreessen Horowitz, the billionaire Sir Richard Branson, and Peter Thiel and Max Levchin, the co-founders of PayPal — observers say it faces the same challenge of building scale that many fintech startups do. The company says it moves more than $750 million a month globally for its customers, but the U.S. had $56.3 billion in remittance outflows alone in 2014, according to data from the World Bank.
It needs partners in order to build the type of disruptive business it really wants to be.
"I'm a big fan of fintech … but a lot of these that we call 'disruptors' aren't really disrupting yet," Maule said.
"I do think they need to land a big name that gives them" big volume, he said.
Miller does not see partnerships as something the company needs. Instead, he sees them as "only complementary to the stand-alone business."
Additionally, Miller says that if TransferWise hadn't established itself independently it would not have a shot at partnerships.
"TransferWise did a great job of building its own brand and network, and if they hadn't done that we'd have no chance to wrap that up and partner with a bank," he said. "We are just seeing another growth engine on top of the existing growth engine."