N26's Co-Founder, Valentin Stalf, to Depart CEO Role and Assume Position on Supervisory Board instead

Wise Considering UK Banking License for Expanded Services and Cost Reduction

Financial technology company Wise, formerly known as TransferWise, is reportedly considering obtaining a banking license in the UK, according to several industry sources. This potential move could enable the company to gain direct access to the UK's payment system and bypass intermediary banks.

The bank analyst who suggested it could be "quite realistic" for Wise to obtain a banking license is named Carlo Santarelli. John Cronin, a banking analyst at SeaPoint Insights, told The Times it is "entirely plausible" that Wise would seek to become a fully-fledged bank.

Founded in 2011, Wise rebranded to its current name in February 2021 to reflect the expansion of its services beyond money transfers. In June, the company also announced plans to move its primary listing to a US stock exchange.

If Wise were to become a bank, they could potentially look to convert the funds they safeguard into deposits, which they could then recycle into lending opportunities. This access could potentially reduce Wise's reliance on third-party banks for clearing and settlement, thereby reducing costs and operational complexity.

The potential benefit of this move is reducing costs and accelerating transfers, according to a report. The dual listing would help drive greater awareness of Wise in the US, the biggest market opportunity for their products, according to the co-founder and CEO.

It's important to note that the plans for Wise to become a bank remain in their early stages, as the company has not yet applied for a banking license. A spokesperson for Wise said the company does not comment on "rumors or speculation."

The dual listing would also enable better access to the world's deepest and most liquid capital market. Moreover, it would allow Wise to continue serving its UK-based owners effectively.

In addition, Wise applied to become a national trust bank in the US in June. The company has spoken with experienced financial services executives over the past two months about roles in a potential banking business.

However, it's crucial to remember that Wise is not a licensed deposit taker and operates under electronic money rules, meaning customer funds cannot be used for lending and must be ring-fenced. If Wise were to become a bank, this would change, and they could potentially look to lend out customer deposits.

This move by Wise would allow them to settle dollar payments directly with the Federal Reserve, bypassing intermediary banks. This could potentially reduce costs and operational complexity even further.

In conclusion, Wise's potential move to become a bank in the UK could represent a significant shift in the company's business model, enabling them to offer a wider range of financial services and potentially reduce costs for customers. However, the plans are still in their early stages, and Wise has not yet applied for a banking license.

N26's Co-Founder, Valentin Stalf, to Depart CEO Role and Assume Position on Supervisory Board instead