Phil Siarri recently sat with Andrew Boyajian, Head of Banking, TransferWise North America who took part in a panel entitled: “The new business opportunities in the Canadian payment industry” at the 2018 Canada FinTech Forum in Montreal on October 31. They discussed the company’s launch in Canada; opportunities and challenges in the local market and more.
Phil Siarri: Hi Andrew, nice to connect with you. Can you tell our audience a little bit about your professional background and what led you to join TransferWise?
Andrew Boyajian: I began my career in the financial sector in financial operations roles at Google and Eventbrite. Following these roles, I served as the Director of International Payments at Kickstarter, where I helped launch the crowdfunding platform in 17 new markets. I’m now the Head of Banking for TransferWise’s operations in North America where I oversee the digital payments space by closely studying existing banking infrastructures and unearthing solutions that better match and exceed customer expectations.
I joined TransferWise because at its core it is a company that aims to make a difference to its customers by providing a fairer, faster, and cheaper financial experience. This idea was (and arguably still is) wildly different for the financial services sector. And, further, TransferWise’s product is built atop two of my interests: payments and internationalization.
PS: Transferwise launched its “borderless account” in Canada in August last year. How has been the experience so far? What were the main challenges and opportunities?
AB: In Canada we have experienced considerable momentum, consumers are moving more than $100 million CAD into and out of Canada through the platform each month and $2.7 billion (CAD) since the company started.
In terms of challenges, there are barriers to entry for fintechs. For instance, fintech companies don't get direct access to payment systems. Instead, for the time being, this access is limited to a select group of banks. And these gatekeepers can create a tougher environment for fair competition and continuity of service. Alongside elevating operational costs, this bank-only connection points introduce risk. As more and more consumers use fintech for daily financial services, they rely on these banks to continue support for fintechs, which isn’t always true.
Physical verification of businesses is another instance, where the federal regulations require paper documentation. For digitally-based fintechs, without a physical network of branches or kiosks, these regulations can appear to discriminate against modern and tech-agnostic practices.
In terms of opportunities, many consumers are unaware of the fees they pay for international money transfers or some simply accept them as a part of doing business. For example, most providers do not transparently disclose the foreign exchange rate. Instead, they include a mark-up on the provided rate without disclosing it as a fee. Whereas TransferWise offers the mid-market rate and clearly shows its fees at the onset of the transaction, allowing consumers to compare us to other services. There needs to be more education around fees and pressure on banks to be more transparent. We see this in other markets like Australia, where the Treasury is investigating disclosure of fees. It calculated that Australians are charged +$2B AUD a year in foreign transaction fees every year! We hope Finance Canada is willing to look at the amount that Canadian consumers pay in opaquely defined fees and take similar action to Europe and Australia.
PS: You are planning to launch a borderless payment card (MasterCard) allowing Canadian users to hold balances in multiple currencies. Who is your primary target market? How would those individuals benefit from such offering?
AB: Our borderless card (once available) will be useful for people that travel, live and work internationally. It is the first platform that gives consumers access to true multi-country banking. Users will be able to hold balances in multiple currencies and spend it at home and abroad with lower foreign exchange fees than traditional banks.
PS: What has been your approach in terms of community outreach versus other markets such as the UK and the US? Were there cultural aspects in Canada that caught your attention?
AB: Canada’s multiculturalism caught our attention. As a home to many new and first-generation Canadians, Canada accounts for one of the highest remittances in the world—as individuals send Canadian currency abroad to support family, friends, spouses or children in other countries.
PS: Last but not least, what is your overall assessment of the local fintech ecosystem? Do think there is a healthy amount of collaboration between incumbents and fintech players?
AB: When it comes to consumers, Canada has one of the lowest fintech adoption rates, according to Ernst & Young’s 2017 fintech Adoption Index. Across 20 markets, Canada ranks 18th for fintech use and adoption.
However, TransferWise is engaging with the Canadian Government and Payments Canada to open payment infrastructure to nonbank payment service providers and fintechs so that we can bring about greater innovation and competition which is in the best interest of consumers.