Cross-border money transfer company TransferGo has chosen to build products on cloud-based banking platform from financial technology (fintech) firm Thought Machine as it expands its business.
As customers were increasingly demanding the ability to complete more transactions within its ecosystem, the company decided to add a digital wallet to its app.
The wallet, which TransferGo described as an anchor product for future additions, will be built on Thought Machine’s Google-inspired cloud platform, known as Vault.
Set up eight years ago, TransferGo’s cross-border payments business, which offers exchange rates much lower than banks, has been focused on European migrants. It recently hit the three million customer mark, and it processed around five million transactions in 2020, a 60% increase on the previous year, worth about £1.5bn.
The company is now expanding its offering. “We are moving more and more into new consumer use cases that everybody can use. A wallet is the anchor product for that, which many of our customers are asking for,” said the company’s CEO, Daumantas Dvilinskas. “Customers will be able to store money in the wallet and reduce friction.”
He added that the wallet was a logical extension for the company: “Customers are using us to send money across borders on different networks, which remains very much our business, but more customers want to keep their money in our ecosystem. Cross-border payments can be completed on our ecosystem.”
Previously customers would make a payment into the app to be sent to another account, but now money can be stored in the wallet. “More and more people want to hold money with us. They can do peer-to-peer transactions within the wallet, which happens instantly,” said Dvilinskas.
He added that people want to bypass banking rails because “they usually face issues with banks on the receive side, such as charges or inferior services”.
TransferGo, like all fintechs challenging traditional financial service providers, has strong IT capabilities. Out of its 250 staff, around 70 are engineers based at its Lithuanian headquarters.
But despite TransferGo’s tech-led culture, it decided that developing its own platform to develop products is not its core competency and decided to go to the market for a supplier.
Dvilinskas said if TransferGo developed everything itself, it would be repeating the mistake of traditional financial services firms, in particular banks. “The reason why banks are struggling to compete on usability is because they have historically built everything themselves,” he said.
“That is a mistake because businesses have to focus on their core competencies and buy everything that is not core. That way you can achieve a superior user experience.”
TransferGo looked at a number of technology providers in the sector when planning its wallet, and decided on Thought Machine’s technology stack. “We liked what it could do for us now and in the future,” said Dvilinskas.
Set up in 2016, Thought Machine is the London-based brainchild of ex-Google executives – including Paul Taylor, the internet giant’s former head of text to speech.
Its cloud-native Vault platform is Google-inspired, aiming to enable banks to offer the functionality and ease of use for customers similar to that offered by the internet giants. Such functionality offers huge operational cost savings and gives customers the digital services they want.