We are pleased to publish this interview with Daumantas Dvilinskas, the CEO and co-founder of TransferGo, one of the top and successful Fintech Companies. Read further, you will see the story of their journey so far and you will understand the secrete behind their success. Daumantas also has a valuable advice for startup fintech companies for 2017. I’m sure you will enjoy this.
1) How did Transfergo start and where did the idea come from?
TransferGo business was born out of frustration while dealing with banks and trying to make international money transfers via them. In 2011 my co-founder and I established a more traditional import/export business, which meant we had to make regular international payments to our suppliers. Back then, banks were our only option and, oh boy, it was a nightmare. Needless to say, we were charged up to 15 times more than now for seven-day settlements, but there was a general sense that customer satisfaction wasn’t really something major UK banks had a great deal of interest in. We’ve faced an unfair and stagnated money transfer sector ourselves – unreliable destination amounts, huge charges and transaction times stretching up to 7 working days.
Once we saw the problem, we realised that a solution such as TransferGo could help many people, like us. Because we understand the problem and feel the pains that our clients have, we can tailor our product and approach to have a 100% focus on what matters the most, and serve our clients to the absolute best of our abilities. We see how lifting the burden of pricey, slow and complicated international money transfers, can change people’s lives, as sometimes an average transaction can be up to 20% of monthly income for the recipient. That money can make a dramatic difference to them, from making ends meet to actually entering the middle class, and that is where we see the real meaning of our business.
2) What is your current business model?
TransferGo is the high-growth international money transfer company that uses a digital account-to-account business model. Funds are paid in locally and then paid out locally. This innovative system means that the company doesn’t have to send money across borders. The sender makes a local payment to TransferGo, which then makes a local payment to the recipient, from any account to any account. Since individual transactions don’t cross borders, we’re able to do this 95% cheaper and many times quicker than traditional players. The business currently has over 45 banking partnerships and 200k+ customers, who send over £18 million monthly, and all those numbers are growing fast.
3) What makes TransferGo different from banks and other online money transfer companies such as Flywire , Revolut , TransferWise, CurrencyFair etc.
TransferGo offers the fastest low cost international account-to-account money transfers in the market.
Firstly, our settlement models are very different. While other companies apply to the p2p model or work on third-party infrastructure, which prolongs the process and allows room for error as money is handled by someone else, we apply the local-in-local-out model, which allows us to payout the money from the pre-funded accounts to recipients as soon as we receive the funds on the sender side. That means money never leaves bank our accounts and is not only safe but also way easier to track, as we can always see where it is.
Secondly, we manage currency fluctuations via an ingenious backend system, meaning that our clients aren’t exposed to currency fluctuation risk, unlike other companies, who usually ask the client to deposit an extra 3% FX deposit to cover any possible currency fluctuations. As currencies fluctuate daily this FX deposit can be quite a large amount if the clients are unlucky. TransferGo are the only international money provider with no FX risk. The company absorbs the FX risk by providing our clients with fixed fees and guaranteed destination amounts, which is enabled by leading hedging technology. That means TransferGo clients know exactly how much they’re sending and exactly how much their recipient will get.
Finally, we have fully localised product experience, including web & mobile products and customer care, making it accessible to the clientele out there who prefer to use services in their local language.
4) How have things changed since transferGo raised $3.4M in Series A Funding last year?
Since raising Series A we’ve reached most of our goals. We’ve introduced close to real time money delivery, something that we envisioned implementing since our launch in 2013. Moreover, we’ve released updated version of our iOS application and are almost ready with our Android MVP to go live shortly. We’ve also added a number of destination countries and expanded our network to include Asia. Finally, in the last year the TransferGo family has grown to 60 employees with 7 nationalities represented, and the team keeps on expanding with even more tech and marketing talents joining teams both in our London and Vilnius offices.
5) TransferGo announced last year the addition of a real-time payment option called TransferGo NOW. How is it working?
TransferGo NOW is a feature that allows users to send money abroad safely and (almost) in real time. This feature gives recipients same-day buying power for a minimal cost on the sender’s side. TransferGo NOW was created to accommodate TransferGo customers who need to send money instantly. By giving customers a choice of new delivery time options, including NOW, TODAY, EXPRESS and Standard, TransferGo allows people to send smaller amounts more frequently. The system works the same way as with our standard transfer, with the only difference being that when making a booking the sender has to choose the delivery option “NOW”. Their recipient then receives the money in their accounts in as little as 30 minutes for them to use it right away.
6) Recently TransferGo Company announced that it is required to alter its product to get the approvals to operate in particular markets. How does the company change its product?
For all fintechs it’s always challenging to open a new business branch or transfer corridor. For TransferGo, because of our business model, opening a new corridor is a very important yet challenging task, as we need to have bank accounts in all the countries we operate. So, for us, it’s not only entering the market but also entering the regulated banking system. It’s true that sometimes we need to adjust our product to comply with some laws and that is definitely more common in far away destinations than it is in the EU, where the regulations are all the same. But we’re always willing to make those changes, if it means we can serve more people and fulfill our promise in given access to fast, cheap and safe money transfers to everyone everywhere. Usually it’s introducing an extra security measures or adding new banking integrations.
7) We have noted that you went to Lancaster University where you pursued a career in Business Studies. How is your educational background helping you to run TransferGo Company?
I graduated in Business Studies from Lancaster University in 2010, a course I took as I was always business-oriented and focused on creating something new, with an aim to add value to society. As one of the co-founders of TransferGo, I am finally fulfilling my dream, not only of leading a successful business, but also of making a real difference and helping people to enter a middle-class lifestyle. It’s why fintech is so fascinating to me.
8) What are some of the challenges that TransferGo is facing?
Obviously fintech is still quite a challenging industry, especially when you need to open new corridors and don’t work with third party providers. It’s more and more common for banks and fintech to cooperate, especially in the main ‘fintech’ hubs such as London, Berlin or even New York. It’s getting easier to enter new markets just because people know what fintech is and everyone find it less scary to get into the conversation. At the same time, the competition is huge, but we’re happy to see that TransferGo as a brand is now well known and respected as a thought-leader in banking relationships among the right circles, which definitely helps in expanding our business in term of opening new corridors, launching new features or even introducing new products.
9) What’s next for TransferGo?/ What do you see happening in the fintech industry in 2017?
2017 is all about the real-time for us and mobile for the industry. We’re now growing quite fast across major markets within Europe and beyond, but we need to improve our mobile presents as we see the growing need for an easy solution in people’s pocket. We’ve already released our iOS app and we’re currently working on an Android version of it. Moreover, we’ve just recently released close to real-time money transfers for some countries in Europe, as we’re seeing an incremental increase in our customer’s needing speedy transfers. Clear evidence that today people value speed and immediacy when making a purchase can also be seen in the latest reports, where the increasing usage of contactless payments and mobile banking in the UK has reached 69%, meaning that almost three quarters of mobile users currently do some form of banking on the their phones. Therefore, by the end of 2017 we are aiming to offer a mobile, real-time money transfers for all major currencies in the world and help the majority of migrants across the globe.
10) What advice can you give entrepreneurs who want to venture into fintech sector in the future?
- Focus on customers with a differentiated value added. Your business idea has to be focused on the needs of the consumer and be tailored to their expectations. Also business has to solve the problem that would create the value added. If you create a business based on that, you have more chance of being successful.
- Be data driven: test, learn and spend more when it works. From our experience, we know that it’s better not to invest too much on the ideas that aren’t tested. We always encourage the team to be creative and think outside the box but we never launch a massive campaign without doing smaller scale tests or pilots. This also helps us to see where mistakes or miscalculations might have been made and helps to prepare for the bigger project. Thus the larger amounts are always spent wisely, based on initial findings with estimated results and success rates.
- Separate hype from reality. Usage growth without revenue growth can be a trap. Don’t get disillusioned by empty growth in number of users. Check the value of those users: Do they bring you revenue? Are they loyal? What’s their value to your brand, apart from just being another number? Obviously, it’s great to be excited about any growth, especially at the early stages, but it’s important not to get tricked by that, but to find the real value that those users bring.
We sincerely thank you Daumantas Dvilinskas, and the team at transfergo for your time and this piece. Cheers!