Tristan Dakin, country manager, Wise Australia
Quietly, Wise is emerging as a challenger to take notice of in Australian banking.
The monthly banking statistics from APRA show Wise Australia making steady progress in its deposit holdings. Not that Wise has much interest in measuring things this way.
At the end of July 2023 Wise held A$614 million in total deposits, with growth accelerating.
Unusually, Wise is licensed by APRA as a Purchased Payment Facility provider, rather than as a bank. It is one of only two PPFs, PayPal Australia being the other.
Wise’s specialty is principally as a payments provider and deposit gathering is no particular priority.
“When we think about growth at Wise we don’t think about it so much by stored liabilities but more by customer engagement with the product,” Tristan Dakin, Wise’s Australian country manager told Banking Day.
“We are registered as a PPF. What comes with that is a fairly heavy capital and liquidity requirement on us.
“Early in 2023, APRA lowered that from 5 per cent to 4 per cent.
“We view our product as much less risky as we don’t do any lending. Before APRA dropped it, we were a very low margin business.
“We don’t really generate any revenue at an entity specific level to cover that [capital] requirement.”
Previously, Dakin said, “we were trying to discourage customers from storing liabilities with us. We were charging balances over $23,000.
“Since APRA lowered the capital ratio to 4 per cent, we’ve been able to remove that balance charge.”
Wise is thinking big about the possibilities.
“We have a really long roadmap to deepen our reach,” he said.
In September 2021, Wise joined the New Payments Platform as a Participant and shareholder. It also joined BECS, via Cuscal as sponsor.
Wise also opened an exchange settlement account with the RBA.
“Our payments are getting cheaper, and getting faster,” Dakin said.
“In December this year, international payments will be on the NPP. We will be fastest way to send money to Australia.”
Another domain for Wise is what’s styled banking-as-a-service.
Three months ago, fintech Parpera relaunched using Wise as its banking provider, replacing Volt Bank, whose sudden closure in mid-2022 stranded the company.
“Banking-as-a-service, that’s a weird term,” Dakin said.
“First of all, we’re not a bank, so we don’t describe it that way internally.
“We call it a platform product. It’s a distribution channel for Wise. It allows financial institutions and banks to … integrate our APIs.”
Two years ago, Wise partnered with Bendigo’s Up Bank to drive cross-border payments.
Banking Day asked if Wise might be planning on upgrading from a Purchased Payment Facility provider to a full banking licence.
“We would have to adhere to APRA’s full credit risk rules,” Dakin said.
“That’s not really on the roadmap at this stage.”