Wise Stock 10x'd Profits In 4 Years. Here's why I think it'll continue
Wise offers a fantastic product. It offers the ability to open a bank account from your phone and hold money in a range of different currencies. The conversion fees between currencies are very low. You can pay out money to bank accounts in different countries. You can recieve money from bank accounts in different countries. Comparing my experience using Wise to my experience using traditional banks, it's a no brainer to go with Wise. So why isn't everyone using Wise? Here's some reasons I can think of:
Wise is still not trusted, especially by the older, more conservative generation who would rather trust a bank that has physical stores
Wise is still not available in all countries. The following figure shows some huge markets which still can't open an account to send money from.
Wise competes against some tough competitors like Revolute and Monzo in the UK & US
So lets have a look at how many customers Wise currently has and how much room it has to grow in the future. The figure below shows 10 million current customers. The population of people in the countries that it currently operates in is over 1 billion. Also from the figure above we can see some huge markets like India (1.3 billion people) and Mexico (120 million people) which Wise still has to expand into. A potential market size of over 2 billion! That's a 200x more than the current number of customers!
Even without growing revenue per customer, it has a massive room to expand. But on top of this I actually think it will grow revenue per customer. Most of its current users are the young, technologically literate, crowd. These people are yet to reach their peak earning years. As the older people who are still using traditional banks move into retirement I expect their financial activity to decline - and with it the revenues of the old scool banks. Meanwhile the young people using fintech banks like Wise are still to hit their peak earning years.
One final sweetener is that there's a pretty big network effect going for Wise. It's easier for me to use Wise because my friends are on it and I can send them money for free, instead of using a competitor where I might have to pay to send money to their Wise account.
I'll finish this article with a few risks that I think Wise still face in their path to dominating the banking industry:
Crypto
Modern fintech competitors who can offer the same service
Regulation by governments deciding that they'd rather have local banks which they can control instead of Wise, a UK based company