RE: Race to the bottom in terms of fee's?12 Oct 2022 10:58
I think you make a good point, startups like this are always a danger...im a little biased as I owe Wise stock so take what I say with a pinch of salt, but my counter argument is below:
For me this industry is all about costs, reputation and innovation. You need low costs to ensure you can keep fees low. You also need to ensure you have a good reputation for people to trust you with their money. You also need innovation to keep you ahead of a market that has a range of options already - depending on your use-case.
Wise is focused on cost, has a very good reputation and is committed to developing its app and service - there is a potential for something like Atlantic Money to eat away at part of the market. But dont forget a lot of people still transfer money through much higher-cost banks, and other services like Western Union etc (which are also more costly) and so there is room for Wise to grow there with its growing reputation and low fees - plus those services tell me that it isnt always about cost that will keep customers coming back to you - reputation and recognition also matter.
My other thought is that firms like Atlantic Money will at some point need to make money - they cant keep their fees low for ever unless they really take mass market share or really can keep costs low - two things I think the jury is definitely still out on.