Sunday, 2024 May 26

UK cross-border payment startup has a plan for APAC

UK-headquartered WorldFirst, an online international payments startup, came into being in 2004 from a basement in Stockwell, South London. The comparative advantage of staying focus on just foreign exchange payments enabled the firm to make speedy and efficient foreign exchange transactions at cheaper rates compared to traditional banks.

One year into its operations, the company handled US$55 million, and it quickly surpassed the US$1 billion mark by 2007. Today, it is an international company, with offices in a number of countries – Singapore included, to make international transfers a simple affair. By the beginning of 2018, WorldFirst has served over 111,000 customers, with up to more than SG$110 billion (US$80 billion) worth of transactions to date.

Expectedly, WorldFirst is not the only company to offer better rates than the banks. WorldRemit, CurrencyFair, Currencies Direct, and TNG etc are some examples of the other players in the international market of foreign remittance.

READ MORE: How this Hong Kong e-wallet finds its fortune by helping foreign domestic helpers save

And this idea of competition is to be expected. The market reacts and competitors will flood into the market. Any innovative idea will end up as another commodity. Thus, WorldFirst has identified a new gap.


The Technology Gap

In Southeast Asia alone, countries like Vietnam and Singapore are still lagging behind the growth in mobile payments despite various initiatives from the government and banks. People seemed to still trust the traditional fiat currency. And WorldFirst is here to change the mindset.

For instance, tracking and communication are some additional features that WorldFirst uses to encourage the adoption. And like other tech companies, the collection of data allows the company to better its services. Taking the case of sending money for overseas education, customers can receive a call to lock in the rates at a certain time to enjoy large savings – a service empowered by the analysis of data.

This effectively puts WordFirst in the middle of the wide spectrum between technology and finance. This unique market positioning sets the company on another trajectory, exploring new ways to humanize technology and getting more people to embrace the benefits that technology can bring into the traditional finance sector.

KrASIA recently spoke with Peter Scully, Managing Director, WorldFirst Singapore, to learn more about the firm’s future plans and how the firm is looking at thriving in the increasingly competitive market.

The following interview was edited for brevity and clarity:

KrASIA (K): Financial technology is said to be disrupting traditional finance, making it cheaper and more convenient for international money transfers. Would traditional banks be able to compete with firms like WorldFirst going forward?

Scully (S): WorldFirst is not a fintech firm. We sit right in the centre from the wide spectrum of finance to technology. Technology itself is not sufficient to ring users on board, especially when it comes to one’s hard earned money, and we are here to solve these pain points – bringing consumers the trust and confidence to use our platforms. We are here to bridge the gap.

Users on our platform, for example, are able to track and communicate during the whole money wiring process. This full visibility is crucial for merchants on eBay, Amazon etc and WorldFirst is the first to bring this solution to the market for e-commerce players by making the entire process transparent to instil trust.

In terms of competition, we believe that every idea will eventually become just another commodity. Thus the way out is to seek continual reinvention rather than look to out-compete other firms. Stay relevant and seek new pain points will be our way forward.

K: In addition to TorFX, HiFX, Currencies Direct, there are also more players such as Alipay and TNG. Would this affect WorldFirst in the region and how does WorldFirst seek to differentiate itself?

S: First, ample research has been done and we see that there is room for growth and expansion in the region. The market is huge.

Singapore, for instance, has been a transmission hub where international trade is key. As a good launchpad for international trade, there should be space for businesses that have the right commitment and business plan. China, and Malaysia similarly by size alone can also offer the same potential for us.

Competition, trade tension and all the uncertainties drive us to continue to be an innovative company to stay in the game.

As for the challenges in this region, I have to say the region is very diverse and hence fragmented. There is no way to have a single focus for all markets as people in Asia have a wide range of cultures and habits. We need to identify the relevant pain points for each and work from there. Indonesia, for instance, is less open and we are not looking to launch a full-fledged business model there due to regulatory constraints. Thailand, as another case in point, might have a big market but the monopolies within their bank communities can definitely stall our expansion plans over there. Our plan is to keep our foot in the door and launch when the opportunity arises.

In China, we have identified a niche market – e-commerce merchants who sell on eBay and Amazon who find it hard to ensure they receive their money through online sale. While we only occupy just 2% of China’s market, the potential is there simply because China is such a big market. We have seen significant revenue growth in that area over the past 3-4 years.

One possible advantage we offer is – FX rates that are three times cheaper than others. After years of dealing closely with the interbank dealers and building relationships, we can now bring the costs as close as possible to the base rates where banks trade amongst each other.

K: What are some pain points when people remit money overseas and what can be done to make the user experience better?

S: In general, people will always prefer better rates and efficient services.

In the China market, for example, our ability to bring down our cost of services and embedded visibility makes WorldFirst a good choice for merchants on platforms like eBay and Amazon.

In Singapore, we take a key focus on the wealthy locals and expats who need to remit money abroad for overseas investments, work, etc. In a competitive market, there are no phenomenal savings when we look at the interbank rates. The spread still has to be earned. But, cost savings can be enhanced if we are able to anticipate our users’ need for FX exchange and allow them to transact earlier when the market swings in their favour, akin to marrying customers’ needs with the market.

The idea is to put the human touch back to financial technology to better serve people.

K: What is WorldFirst’s business strategy for APAC? What is WorldFirst’s revenue model?

S: We charge fees for the transfers and also earn from margins, while keeping our operations lean. We rely on a centralized cash management process with base capital, cash in the bank, drawdown facilities with the bank etc to handle the spikes in demand on our day-to-day operations.


Editor: Ben Jiang


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