How Wise landed on a global whitespace

In 2011 friends Kristo Käärmann and Taavet Hinrikus found themselves frustrated by international money transfers. They’re both from Estonia. Taavet lived in London but got paid in euros. Kristo also lived in London, but got paid in pounds, but he had a house and mortgage in euros back in Estonia. They both moved their money across borders— which meant expensive fees and bad exchange rates. They realized there had to be a better way to manage the situation that worked for both of them.

Each month, the two friends looked up the mid-market exchange rate. Taavet put his euros into Kristo’s Estonian bank account, and Kristo topped up Taavet’s UK account with his pounds. Both got the currency they needed, and neither paid any extra on bad exchange rates or unreasonable charges. Typically international wires can take hours if not sometimes days. Their transfers were instant.

We live in a globalized world, we're more connected than ever before, travel is easier than it's ever been and its not uncommon for a career to enable you to move from country to country. This brings a lot of personal opportunity, but it can also bring a lot of friction - particularly when it comes to how to manage finances across borders. The international financial system has largely remained unchanged for decades, Want to move money? Get yourself an IBAN (an international banking number) go through a laborious process of inputting all relevant details and then accept the exorbitant fees.

Out of this friction & frustration Wise – or Transferwise as it was previously known – was born. The whitespace the business filled was people with the same challenge as the two founders - connecting international people like themselves and enabling them to move money internationally seamlessly, with minimum fees.

Finding a whitespace for a business and brand is pivotal for its success if you want to scale. The whitespace is the opportunity in the market for your business to carve out its niche, many established brands pour a lot of time and heavy consultancy fees into determining it. But here the two friends had, completely by accident, realized that they were themselves the whitespace. ‘There must be others like us…’ they thought.

You should give people something that is worth trying. If we had been offering a service which is 5% cheaper than the banks, people could have said: who cares? But if we say: we are ten times cheaper than a bank, well, this is a real incentive to try it.

TransferWise avoids international bank-transfer fees by keeping the money inside each country, using domestic accounts to stop the money ever moving across borders. Once they had launched, the founders knew they had to deliver a better experience as well as better fees to deliver on the whitespace opportunity, as founder Taavet Hinrikus explains:

“It’s a question of designing experiences which are digital by nature and ten times better than the old-world equivalent,” explains Taavet Hinrikus. “The experience we designed at TransferWise was seamless end-to-end. The ease of use has to be part of the design of your product from the start. This is what people care about. Otherwise, you’re going to get nowhere.”

He also believes the technology and approach also had to stand out beyond the incremental “And you should give people something that is worth trying. If we had been offering a service which is 5% cheaper than the banks, people could have said: who cares? But if we say: we are ten times cheaper than a bank, well, this is a real incentive to try it.”

Wise has now grown from that initial idea to a global force in the finance industry, it's the go-to platform for international money movement and has filled the niche it found in its whitespace perfectly.

Wise has now expanded its offering to other aspects of banking, such as a credit card that enables you to spend without the fees. All the new innovations still deliver on that initial whitespace opportunity the founders saw over a decade ago.

THE TAKEAWAY

The whitespace you develop will enable your brand to carve out a niche in the market and will impact positioning, product development and ultimately messaging.

Your origin story might actually be an important aspect of your whitespace.

GO DEEPER

Listen to the founder of Wise talk about their origin story here.