Shares in foreign exchange and payments group Wise (WISE), (formerly TransferWise) dropped 3.5% to 889.8p despite delivering second quarter trading in line with expectations.

Revenues increased 25% year-on-year to £132.8m while the number of active retail customers grew 22% to reach 3.9 million.

Recent share price weakness has been related to increasing fears that Wise may be losing its competitive edge as banks improve their product offering by transferring money between different geographies at much higher speeds.

However Wise has continued to innovate and is expanding its range of services, and its price competitive offering is driving customer growth.

COMPETING ON PRICE AND SPEED

Wise was listed on the London Stock Market in July, and specializes in cross-border currency transfers. It has built its business by offering better pricing, often 90% below the banks, and facilitating the transfer of money across borders at speed.

However banks still account for two-thirds of cross border money transfers and are becoming increasingly cognisant of the competitive threat poised by the likes of Wise.

Recent industry commentary has highlighted the ability of banks to move money at faster speeds between Europe and America, which is one of Wise’s key markets.

REDUCED FEES

In response to the threat from banks Wise has reduced its fees to ensure that it maintains its price competitiveness. The group has also launched new services including the ability to attach receipts and notes to card transactions.

Moreover from a service delivery perspective it has improved delivery speed with 40% (compared to a first quarter figure of 32%) of all transfers delivered instantly.

Numis analyst Kim Bergoe said: ‘We maintain our estimates, target price and Hold recommendation, reflecting less than 10% up-side to our target price, but note that the recent share price weakness presents a more attractive entry point’.

READ MORE ABOUT WISE HERE

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Issue Date: 19 Oct 2021