Wise’s Ambitious Move Towards Banking in the UK
The payment company Wise is eyeing the possibility of becoming a fully licensed bank in the United Kingdom. Recent reports indicate that the company has engaged with experienced financial services professionals over the past couple of months to explore strategic roles within a future banking entity.
Initial Steps Towards Banking Licensure
According to a report by the British newspaper, The Times, these discussions are still in preliminary stages, as Wise has yet to formally request a banking license. This cautious approach suggests that the company is thoughtfully contemplating the implications of such a significant transition.
Wise’s Evolution in Financial Services
Founded in 2011 under the name TransferWise, Wise initially focused on money transfers. In February 2021, the company rebranded to simply “Wise,” reflecting its diversification into various financial services, including banking features like debit cards and multi-currency accounts. Despite this growth, Wise currently operates under regulations for electronic money services, which impose restrictions on the utilization of customer funds for loans.
Expert Opinions on Banking Prospects
Banking analyst John Cronin believes that Wise’s ambition to become a full-fledged bank is “completely plausible.” He noted that the company could potentially convert safeguarded customer deposits into opportunities for lending, enabling direct access to the UK’s payment infrastructure. This move could significantly reduce its dependence on third-party banks, thereby minimizing costs and operational complexities.
Recent Applications and Strategic Moves
In addition to its aspirations in the UK, Wise has made waves in the United States by applying to establish a National Trust Bank. This venture would grant Wise direct access to the Federal Reserve, streamlining dollar payments and potentially lowering transaction costs. Such efforts underscore the company’s commitment to enhancing service efficiency.
Plans for Dual Listing
Wise is also planning to shift its primary listing to the U.S. stock market while maintaining a secondary listing on the London Stock Exchange. This dual listing strategy is anticipated to provide significant capital market advantages, as stated by co-founder and CEO Kristo Käärmann.
The Path Forward for Wise
According to Käärmann, pursuing a dual listing will help Wise enhance its brand presence in the U.S., which is currently viewed as the largest market opportunity for its products. It will also enable better access to the most liquid capital markets globally. As Wise aims to balance its commitment to UK clients, this strategic pivot could pave the way for continued growth and innovation in the financial sector.