TransferWise Business Strategies for Sustainable Growth

TRANSFERWISE: DISRUPT OR Asper Consulting Group Emily Sanders Matt Borgford Tanis Brako Carlos Kan DISRUPTED? Presenting to: Mr. Kristo Kaarmann & Taavet Hinrikus, Co-founders

KEY ISSUE How does TransferWise scale it s business sustainably into the future? Introduction Analysis Alternatives Implementation Risks Conclusion

CORE CHALLENGES Financial Security Business Model Reputation Reliant partnerships Scalability Internal Capability Unbalanced liquidity Unsustainable acquisition cost Recent glitch Comparative advertising Introduction Analysis Alternatives Implementation Risks Conclusion

RECOMMENDATION Innovate business model through advertising revenue & new technology Introduction Analysis Alternatives Implementation Risks Conclusion

STRATEGIC OBJECTIVES Zero Fees Achieve within 10 years Sustainability Financial, profitability Create Brand Excitement Increase user base Introduction Analysis Alternatives Implementation Risks Conclusion

TRANSFERWISE Price Delight users and eliminate inefficiencies in the existing money transfer ecosystem. Convenience Trust Coverage Speed Introduction Analysis Alternatives Implementation Risks Conclusion

CORE COMPETENCIES Cost Effective transferring of funds across international borders Financial Technology TransferWise needs to leverage core competencies to fuel growth Introduction Analysis Alternatives Implementation Risks Conclusion

REVENUE AND PROFITABILITY 78% of revenue from Europe Revenue (in millions) Net Profit margin % 5% 160 20% 10% 10% 140 0% 120 -10% 100 -20% 80 -30% -40% 60 -50% 40 -60% -69% Profitability % 20 -70% 48 97 151 0 -80% 2016 2017 2018 Introduction Analysis Alternatives Implementation Risks Conclusion

TRANSFERWISE ENVIRONMENT Competition Partnerships French Groupe BPCE Western Union Can use TransferWise directly through App Bank of England Market leader in money remittance services by revenue Low fees for India and Mexico Wide reach Quick transfers Permission to use real-time gross settlement account Startups N26 LHV Introduction Analysis Alternatives Implementation Risks Conclusion

CONSUMER Low Fees Outflow Country New entrants sending money home Students living abroad Low/mid income level Inflow Country Accessibility Convenience What do they value? Quick Transfers Receiving funds Low/mid income level Security The consumer drives the need for TransferWise Introduction Analysis Alternatives Implementation Risks Conclusion

KEY COUNTRIES (US BILLION$) Migrant Remittance Outflows 2013 2014 2015 2016 United States 56 59 63 67 Saudi Arabia 35 37 39 38 Switzerland 25 26 26 26 Germany 20 21 29 21 Migrant Remittance Inflows 2013 2014 2015 2016 India 70 70 69 63 China 59 62 64 61 Philippines 27 29 30 31 Mexico 23 25 26 29 Introduction Analysis Alternatives Implementation Risks Conclusion

KEY COUNTRIES (US BILLION$) Migrant Remittance Outflows 2013 2014 2015 2016 United States 56 59 63 67 Saudi Arabia 35 37 39 38 Switzerland 25 26 26 26 Germany 20 21 29 21 Migrant Remittance Inflows 2013 2014 2015 2016 India 70 70 69 63 China 59 62 64 61 Philippines 27 29 30 31 Mexico 23 25 26 29 There is opportunity in United States, Philippines, and Mexico Introduction Analysis Alternatives Implementation Risks Conclusion

MARKET TRENDS Increase in App usage Agility of tech startups Disruptive models TransferWise needs to be innovative and agile to grow Introduction Analysis Alternatives Implementation Risks Conclusion

ENVIRONMENTAL ANALYSIS Easy to use Quick transfers Low fees (10-20 times) Reputation of partnerships Inexperienced leadership Recent PR issues Strength Challenge Adoption of tech Consumer Trends Low fees at banks Partnership sustainability Emergence of fintech startups Opportunity Threat Introduction Analysis Alternatives Implementation Risks Conclusion

ALTERNATIVES Innovate through new technology & revenue stream Differentiate to related services Launch Digital Bank Introduction Analysis Alternatives Implementation Risks Conclusion

ALTERNATIVE 1 Differentiate to Related Services Pro Con Differentiate to related services from the customers perspective. Ex: social media/ chat functionality Introduction Analysis Alternatives Implementation Risks Conclusion

ALTERNATIVE 2 Launch Digital Bank Pro Con Innovate through the value chain by launching a digital bank. Ex: Tangerine Introduction Analysis Alternatives Implementation Risks Conclusion

ALTERNATIVE 3 Innovate through New Technology & Revenue Streams Pro Con Innovate through the adoption of new technology and expanding to new revenue streams. Ex: adopt blockchain and advertising revenue Introduction Analysis Alternatives Implementation Risks Conclusion

DECISION CRITERIA Scale the business by increasing the user base Growth Ensure financial sustainability of the company Core Play to strengths Sustainability Competencies Maintain strong customer satisfaction ratings Customer Satisfaction Introduction Analysis Alternatives Implementation Risks Conclusion

DECISION CRITERIA Differentiate to Related Services Launch Digital Bank Diversify through ad revenue & New Tech Growth Scale the business Core Competencies Play to strengths Customer Satisfaction Maintain strong rating Sustainability Ensure financial sustainability Introduction Analysis Alternatives Implementation Risks Conclusion

FUTURE FORWARD Leading Financial remittance company in the world Innovate business model through advertising revenue & new technology Zero Fee Brand Excitement Financial Sustainability Introduction Analysis Alternatives Implementation Risks Conclusion

IMPLEMENTATION Innovation Banking partnerships Reach new customers Invest in IT Banking Partners Security Considerations New emerging technologies Drive Growth Instill Trust Introduction Analysis Alternatives Implementation Risks Conclusion

DRIVE GROWTH CONSUMER AWARENESS Demographic New Entrants Students Public Value Low fees, trust Convenience Accessibility Campaign Location: Mexico & Phillippines Signage in Embassies to create relationship before moving to new country Guerilla Marketing: College Football (Soccer) game Surprise & Delight representatives at game Free Drink Tickets Social Media #TransferWire Promotion Continue: SEO, Social Media Digital Word of Mouth Targeting the consumers that require this service is key to growing TransferWire Introduction Analysis Alternatives Implementation Risks Conclusion

DRIVE GROWTH - NATURAL AFFILIATIONS Mexico USA Large need for money transfers Develop bank partnership Growing outflow of money transfers Develop bank partnership Bank of America Leverage existing natural affiliations and growth of money transfers to drive growth Introduction Analysis Alternatives Implementation Risks Conclusion

DRIVE GROWTH - NATURAL AFFILIATIONS Phillippines Canada Large need for money transfers Develop bank partnership Growing outflow of money transfers Develop bank partnership Scotiabank Leverage existing natural affiliations and growth of money transfers to drive growth Introduction Analysis Alternatives Implementation Risks Conclusion

INNOVATION CREATE HUB WITHIN TRANSFERWIRE Optimize Business Model Use AI to optimize money pools IT Development Continually improve the platform Security Digital fingerprints Blockchain Invest in research to incorporate technology Invest in people to adapt to technology trends and instill trust by creating a reliable service Introduction Analysis Alternatives Implementation Risks Conclusion

DRIVE GROWTH Product Quick transfers Ease of use Price Lower fees by incorporating new partnerships Offer incentives using Artificial Intelligence (optimize money pools) Place Facebook and Instagram Banks where partnership exists Scooters/mopeds in Mexico and Phillippines Cars for Canada & US Ensure the platform is accessible to the target consumer Introduction Analysis Alternatives Implementation Risks Conclusion

INTERNAL HR REQUIREMENTS Innovation Hub Businesses Expansion 1 Research Scientist Advertise on TransferWire Platform 5 staff US, Mexico Office Canada & Phillippines Office 5 staff each Natural growth Invest in people to adapt to technology trends and instill trust by creating a reliable service Introduction Analysis Alternatives Implementation Risks Conclusion

IMPLEMENTATION TIMELINE 2018 Q4 2019 2020 2021 2022 2023 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Marketing Develop/Revaluate Launch Partnerships Marketing Expense Innovation AI & Algorithim Security Staff and training Digital Transformation and App Expansion US Canada Introduction Analysis Alternatives Implementation Risks Conclusion

COST OF IMPLEMENTATION Investment in MM 2019 2020 2021 2022 2023 Trends Innovation AI & Algorithim (R&D) Security Data Scientist and team Digital Transformation and App Marketing SEO (Google) Social Media App Embassy Marketing 'Guerrilla' Marketing Recruitment and Training Staff Training Expansion Office & Renovation 0.5 0.3 0.5 0.1 1.00 0.5 0.6 0.1 1.1 0.6 1.00 0.1 1.2 0.7 1.2 0.1 1.5 1.0 1.50 0.1 5.3 3.1 4.8 0.5 0.4 0.2 0.1 0.1 0.1 0.3 0.2 0.1 0.1 0.1 0.3 0.2 0.1 0.1 0.1 0.3 0.2 0.1 0.1 0.1 0.3 0.2 0.1 0.1 0.1 1.6 1.0 0.5 0.5 0.5 0.5 0.2 1.00 0.2 1.4 0.2 1.8 0.2 2.2 0.2 6.9 1.00 0.25 0.25 0 0 0.5 1.00 Total 3.3 4.5 5.2 6.0 7.8 26.8 Introduction Analysis Alternatives Implementation Risks Conclusion

CUSTOMER ACQUISITION COST $132.00 Reduction of costumer acquisition cost $60.00 $30.00 $15.00 $13.00 $11.00 2018 2019 2020 2021 2022 2023 Introduction Analysis Alternatives Implementation Risks Conclusion

ASSUMPTION FOR ADVERTISEMENTS Number of advertisements Price per view $ 150 Pay-per-use 100,000 Views Price 50,000 0.50 250,000 Views 107,500 $ 0.43 500,000 Views 185,000 $ 0.37 1,000,000 views 300,000 $ 0.30 70 30 15 3 2019 2020 2021 2022 2023 Introduction Analysis Alternatives Implementation Risks Conclusion

FROM REMITTANCE FEE TO ADS WILL REACH ZERO TRANSACTION FEE BY 2028 Remittance Fee Advertisements 90% 80% 75% 65% 55% 45% 35% 25% 20% 10% 2019 2020 2021 2022 2023 Introduction Analysis Alternatives Implementation Risks Conclusion

INCREASE IN TRAFFIC WILL DRIVE REVENUE GROWTH Amounts in MM Revenue will be 2.2x vs 2019 340 295 219 182 159 2019 2020 2021 2022 2023 Introduction Analysis Alternatives Implementation Risks Conclusion

PROFITABILITY DRIVEN BY ADVERTISEMENTS 13% 9% 6% 5% 4% 2019 2020 2021 2022 2023 Introduction Analysis Alternatives Implementation Risks Conclusion

POSITIVE NPV OF USD 5.0 MM IN CONSERVATIVE SCENARIO (PAY-BACK PERIOD 3.5 YRS) Conservative Expected Optimistic 2019 2020 2021 2022 2023 Introduction Analysis Alternatives Implementation Risks Conclusion

KPIS AND CONTROLS Indicator How to measure? 2019 2020 2021 2022 2023 Customer Base Increase in base y-o-y (in MM) 4 MM 5 MM 7 MM 10 MM 15 MM Profitability % Margin 5% 4% 6% 9% 13% Customer Satisfaction Survey rating Trust Pilot 9.2 9.3 9.4 9.5 9.6 Introduction Analysis Alternatives Implementation Risks Conclusion

RISK AND MITIGATION Probability 1. Advertiser Acceptance 1. Invest in relationships and reduce rates 2. Employee Buy-In 2. Increase focus and change management 3. 3. Declining Customer Satisfaction Increase personalization of advertising Impact Introduction Analysis Alternatives Implementation Risks Conclusion

CONCLUSION Innovate business model through advertising revenue & new technology Introduction Analysis Alternatives Implementation Risks Conclusion

APPENDICE

APPENDICE Number of users Avg. Revenue per Transaction Revenue (in millions) Net Income (in millions) Net Profit margin % 4,400,000 12.00 $ 158.55 5,000,000 12.00 $ 182.3325 7,000,000 12.00 $ 218.799 13.13 10,000,000 $ 295.37865 26.58 15,000,000 $ 339.685448 44.16 12.00 12.00 7.93 5% 7.29 4% 6% 9% 13% Introduction Analysis Alternatives Implementation Risks Conclusion