Customer-Centric Disruption in Tourism Exchange: TransferWise Case Study
Explore how TransferWise is disrupting the market through customer-centric experiences rather than new technology. The consulting group from Lund University presents insights on enhancing customer experience, disrupting the tourism exchange industry, and leveraging technology for growth. Dive into TransferWise's current situation, challenges, and the roadmap for future disruption.
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Presentation Transcript
TransferWise Disruptor or disrupted LUSEM Consulting Group Lund University School of Economics and Management 1/10/2019 Ella Zhao, Hanna Rasmusson, Samuel Spjuth & Erik Mansson Presenting to: Mr Kristo Kaarmann & Mr Taavet Hinrikus
The true disruptive force in the market is not new technology but superior customer experiences granted by it
Better customer experience the true disruptor of the markets Netflix Blockbuster Disruption Uber Taxi Disruption AirBnB Hilton Disruption Remittance TransferWise Disruption Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
The recommendation in short Disrupt the tourism exchange industry Develop API solutions Insert Tech development team Superior Customer Experience Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Agenda Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Current situation of TransferWise Creating superior transfer services 4 million customers (1,7 % of global customer base) 600 employees in 9 offices $4 billion funds transferred/month Founded in 2010 P P Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Current challenges in the transfer business Possible Money Laundry Grow customer base Find new markets Blockchain Upcoming technology Possible wormholes Business model in need of large base Expanding of the value proposition cements market position Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Main Challenge How can TransferWise position itself for future disruption and grow it s customer base Recommendation Enhance customer centricity through entering tourism exchange industry, driving API:s and technology development Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Mapping the remittance market Fraudulent activity threatening credibility $574 b transferred (230 million transferrers) Remittance market Liquidity balance between remittance inflow inflow/outflow Traditional banking pushing digital Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Defining customer experience Price Price Price Price Price Customer Experience Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Navigating in a digital transformation Omni-channel (ex H&M) Eco-system driver Eco-system driver (ex Amazon) (ex Amazon) Brand integration Supplier (ex Unilever) Modular (ex PayPal) (ex PayPal) Modular API Superior product Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Mapping the competitive landscape Fast transfers Western Union TransferWise Low fee High fee OFX Traditional banking World first Slow transfers Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Positioning TransferWise for disruption Customer centered TransferWise Low fee High fee Western Union OFX Traditional banking World first Revenue centric Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Alternative routes for future of TransferWise Launch Transferwise through Wechat and penetrate the Chinese market China Credit Financing Venture into B2B credit financing Consumer centricity Drive consumer centricity through tourism API:s and Tech development team Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Evaluation criteria for success Grow consumer base Drive liquidity Build brand awareness 1 2 3 Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Evaluating the alternative routes Credit financing Customer centricity China Grow consumer base 1 Drive liquidity 2 Build brand awareness 3 Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Main Challenge How can TransferWise position itself for future disruption and grow it s customer base Recommendation Enhance customer centricity through entering tourism exchange industry, driving API:s and technology development Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Explaining the recommendation in three steps Key objectives Tap the tourism exchange market with Borderless account trough bold marketing Consumer growth by 45% in 2 years Drive plug an play solutions through API in a variety of industries Improving convenient remittance Invest in technology development to monitor fraudulent activity and blockchain growth Be the key player in remittance when blockchain matures Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Three main building blocks for implementing change Be the key player in remittance when blockchain matures Consumer growth by 45% in 2 years Improving convenient remittance Tech Disrupt tourism $ exchange Plug & Play (API) development team Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Standing in the frontline of monetary exchange Disrupt tourism $ exchange $ Cost ? Purpose Action People Influencers Social media Out of home And.. 500, 00 700, 00 Grow customer base on a global scale with Bounder less account PR-team Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
#Suetheworldbank Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Driving brand awareness Plug and Play (API) $ Cost ? Purpose Action People Plug into social media platforms 400,000 Transfer from your pocket to your friends Transfer from your salary account to your families Programmers Sales team Plug into businesses remuneration systems Etc Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Arm yourself for change Tech development team $ Cost ? Purpose Action People Developing blockchain technology Detect spurious transaction Potential aqusiton opportunity 250,000 Turn disruption into opportunity Data monitoring system Programmers 150,000 Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Timeline Costs 18/19 19/20 20/21 21/22 22/23 Targeting Tourism industry Plug and Play (API) Tech-development team Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Implementation costs Costs 18/19 19/20 20/21 21/22 22/23 Targeting Tourism industry Tourism Influencers Social media Advertisement 18/19 19/20 20/21 21/22 22/23 0.5 0.5 1.5 0.5 0.2 1.6 0.5 0.2 1.6 0.5 0.2 1.6 0.5 0.2 1.6 Total 2.5 2.3 2.3 2.3 2.3 Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Implementation costs Costs 18/19 19/20 20/21 21/22 22/23 Plug and Play API Sales 18/19 19/20 20/21 21/22 22/23 0.4 0.4 0.4 0.4 0.4 Total 0.4 0.4 0.4 0.4 0.4 Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Implementation costs Costs 18/19 19/20 20/21 21/22 22/23 Tech-development team Tech development Developers Money laundry team 18/19 19/20 20/21 21/22 22/23 0.25 0.15 0.25 0.15 0.25 0.15 0.25 0.15 0.25 0.15 Total 0.4 0.4 0.4 0.4 0.4 Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Implementation costs Total Tourism focus API Teach development 18/19 19/20 20/21 21/22 22/23 2.51 0.4 0.4 2.3 0.4 0.4 2.3 0.4 0.4 2.3 0.4 0.4 2.3 0.4 0.4 Sum 3.31 3.13 3.13 3.13 3.13 Total implementation costs: $15.8M Fund with venture capital Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Continued but stabilized revenue growth Average fee Value of transferred money $M 1.00% 35,000.0 0.90% 30,000.0 0.80% 25,000.0 0.70% 0.60% 20,000.0 0.50% 15,000.0 0.40% 0.30% 10,000.0 0.20% 5,000.0 0.10% 0.00% 0.0 17/18 18/19 19/20 20/21 21/22 22/23 17/18 18/19 19/20 20/21 21/22 22/23 Revenue 170.0 160.0 150.0 140.0 130.0 120.0 110.0 100.0 17/18 18/19 19/20 20/21 21/22 22/23 Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Higher transaction values lower exchange costs Net income margin 0.10 0.08 Income driven by lower exchange rates 0.06 0.04 0.02 - 18/19 19/20 20/21 21/22 22/23 Profit 12.00 10.00 Net income CAGR of 12% 8.00 6.00 4.00 2.00 - 18/19 19/20 20/21 21/22 22/23 Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Market share 2017/18 2022/23 10% 18% 82% 90% TransferWise Others TransferWise Others Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Funding Venture capitalists Fund implementation of new strategy Build up funds for litigation and regulatory questions Fund illiquidity problems Build up fund for blockchain acquisitions Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Risks and mitigations Likeliness Risk Mitigation 1 1. Investors not ready for heavy Blockchain acquisitions 2. Liquidity problem In house development possible reallocation 3 Growing customer base and liquidity fund to offset Building regulatory and litigation 2 3. Regulatory risk Impact Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Main Challenge How can TransferWise position itself for future disruption and grow it s customer base Recommendation Enhance customer centricity through entering tourism exchange industry, driving API:s and technology development Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Current challenges in the transfer business Possible Money Laundry Grow customer base Find new markets Blockchain Technology development team Technology development team API development Disrupt the tourism exchange industry Superior Customer Experience Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
The true disruptive force in the market is not new technology but superior customer experiences granted by it
Positioning TransferWise for disruption Customer centered TransferWise Low fee High fee Western Union OFX Traditional banking World first Revenue centric Situation Analysis Alternatives Recommendation Implementation Financials Risks Conclusion
Appendix 1 : Bailout plan Develop daughter brand for Blockchain P2P to target digital bank solutions Incremental divest as needed Take Set up daughter brand Target digital banks blockchain experience
SWOT Strength: Functioning business model; strong customer base; leading market position S S Threat: Blockchain; high competition Opportunity: Increasing international mobility O T W Weaknesses: Industry experience
