Banks Surrender: The End of SWIFT's Cross-Border Monopoly

The fintech that saves customers £1.8B annually is crushing legacy banks—and ROIC is accelerating.

Raiffeisen Bank International (RBI), one of Europe's largest banking groups, has partnered with Wise Platform to provide cross-border money transfer services, marking a pivotal shift in how traditional banks are approaching international payments. The partnership, announced in May 2025 at Wise Connect London, enables RBI to offer its customers in Kosovo and beyond faster, more affordable, and fully transparent international money transfers directly through the Raiffeisen mobile app.

This isn't merely about bypassing SWIFT rails—it's about RBI recognizing that building comparable infrastructure in-house would be prohibitively expensive and time-consuming. Raiffeisen Bank shared how Wise's extensive global network and ethos of transparency and efficiency influenced its decision to collaborate, noting that partnership solved critical capability gaps more effectively than building infrastructure internally, without the significant investment of time, resources and money that a build would require.

Why More Banks Will Adopt Wise

The short answer: Absolutely, and it's already accelerating dramatically.

Wise Platform now has 85+ partners globally, adding 32 new partners in FY2024 alone, including some of the world's largest financial institutions. Major new partnerships include Nubank in Brazil (100+ million customers), Mox Bank in Hong Kong, N26 in Europe, UniCredit in Italy, Itaú Unibanco in Brazil, and Qonto in France.

The Correspondent Services Game-Changer

Wise's Correspondent Services, launched in collaboration with SWIFT at Sibos 2023, allows banks to integrate Wise's infrastructure using existing SWIFT-based rails and messaging systems. Since launch, banks and financial institutions in 11 countries have adopted Correspondent Services, seamlessly integrating the solution with minimal configuration changes.

This is brilliant positioning. Rather than asking banks to rip out SWIFT entirely, Wise offers a hybrid approach—banks can leverage SWIFT's messaging network while tapping into Wise's superior settlement infrastructure. It's the banking equivalent of offering a bridge instead of demanding customers swim across a river.

Why Banks Are Capitulating

The economics are brutal for traditional banks:

1. Cost differential: Wise saves customers over £1.8 billion annually in FY2024 compared to traditional banks, with an average cross-border take rate of just 0.67%

2. Speed advantage: 62% of Wise payments are instant (under 20 seconds), 83% arrive within an hour, and 95% within 24 hours, compared to 3-5 days for traditional SWIFT transfers

3. Customer expectations: Consumers now expect the same fast, low-cost and transparent experience from their global payments as they do from their domestic counterparts Banks face a classic "build, buy, or partner" decision. Building would take years and hundreds of millions of dollars. Buying Wise isn't realistic given its £11+ billion market cap. Partnering is the pragmatic choice.

Wise's Economic Moats: Formidable and Widening

Wise possesses several overlapping competitive advantages that would be extraordinarily difficult to replicate:

1. Infrastructure Moat (Network Effects)

Wise operates with 90+ local banking partners, 65+ licenses globally, 6 direct connections to domestic payment systems (including Australia's NPP, added in FY2024), enabling payments in 40+ currencies across 160+ countries.

Each new license, each direct connection, each banking partnership makes the network more valuable. This is textbook network effects—the more customers and partners using Wise, the more valuable it becomes, creating a flywheel that competitors struggle to match.

2. Regulatory Moat

In FY2024, Wise obtained a Type 1 Funds Transfer Service Provider license in Japan, becoming one of the first international financial services companies to receive this license, removing the previous 1 million JPY single transaction limit and enabling transfers up to 150 million JPY.

Accumulating 65+ licenses across multiple jurisdictions represents years of regulatory work and millions in compliance costs. New entrants face a daunting barrier.

3. Technology and Data Moat

Wise has invested in machine learning and AI across various operations over the last decade, including fighting financial crime, currency flow prediction, and risk management. The company processes over a million documents monthly with this technology, with a single global view of all transactions that helps automate processes and improve the customer experience.

With over 800 engineers shipping 120+ releases per day across 750+ cloud-based services, and proprietary global treasury management systems providing real-time FX positions and smart fund routing, Wise's technology infrastructure creates a significant competitive advantage.

4. Brand and Trust Moat

Wise has a Net Promoter Score of 66, with over 65% of customers coming via word-of-mouth in FY2024. Wise In an industry plagued by hidden fees and poor customer experiences, Wise's transparent approach has created evangelical customers—the most sustainable form of marketing.

Return on Invested Capital: Exceptional and Improving

ROIC is where Wise truly shines as a quality compounder.

Return on invested capital (ROIC) is 25.12% Wise plc (LON:WISE) Statistics & Valuation Metrics, though different calculation methodologies show ROIC ranging from 13.2% to as high as 110.06% on an annualized basis for recent quarters.

Even taking the most conservative 13.2% figure, this easily exceeds our 15% hurdle rate. The 25% figure is more representative of normalized performance—roughly 10 percentage points above your threshold, indicating a high-quality business generating substantial returns on capital.

Additional profitability metrics underscore this quality:

• Return on Equity (ROE): 35.22%

• Gross margin: 80.05%, Operating margin: 33.91%, Net margin: 25.33%

• Underlying gross profit margin expanded from 63% in FY2023 to 73% in FY2024

These are exceptional metrics for a financial services business, reflecting strong unit economics and operating leverage.

Growth Trajectory: 15-20% CAGR with Expanding TAM

Historical Growth (Last 3 Years)

From listing to FY2024, Wise achieved 30% annualized volume growth, with active customers growing at a 29% CAGR, cross-border volumes at 30% CAGR to £118.5 billion, and customer balances at 53% CAGR to £13.3 billion. Underlying income grew 41% CAGR and underlying profit before tax grew 83% CAGR over the last three years.

Forward Guidance

Management expects 15-20% CAGR growth in underlying income over the medium term from a FY2024 base, supported by continued high levels of customer growth. For FY2025 specifically, underlying income growth is also expected within this 15-20% range.

The Massive TAM Opportunity

The addressable market for cross-border payments is £11 trillion annually (£2+ trillion from consumers, £9+ trillion from SMBs), and Wise currently has less than 1% market share of this vast and growing market.

With only 12.8 million active customers out of 280+ million people living outside their country of birth, Wise has barely scratched the surface. The runway for growth is extraordinary.

Account Adoption Driving Value

48% of active personal customers and 60% of active business customers have adopted the Wise Account. Personal Wise Account customers generate approximately 25% more underlying income than transfer-only customers, while Wise Business account customers generate approximately 100% more underlying income.

As more customers adopt the multi-currency account with cards and investment features, average revenue per customer should increase substantially.

Valuation: Fairly Valued to Modestly Expensive

Current Multiples

• P/E Ratio (TTM): 25-28x

• EV/EBITDA: 15.63-17.74x

• EV/FCF: 2.01-2.39x

• Market Cap: ~£11.5 billion

Valuation Assessment

At 25-28x earnings for a business growing 15-20% with ROIC north of 25%, expanding margins, and a massive TAM, Wise appears fairly valued to modestly expensive but not egregiously so.

For context:

• The PEG ratio (P/E divided by growth rate) sits around 1.3-1.9x, which is reasonable for a quality growth compounder

• Analyst consensus suggests the current P/E of 27.4x is expensive compared to the estimated fair P/E of 17.1x

• The stock has strong fundamentals with £1.43-1.85 billion in cash versus only £185-240 million in debt, giving a robust net cash position of £1.24-1.61 billion

The Quality Premium Justification

While Wise trades at a premium to the market, consider:

1. Capital efficiency: Free cash flow conversion of 101% of profit before tax in FY2024

2. Minimal capital requirements: Unlike traditional banks, Wise doesn't need constant equity raises

3. Operating leverage: Underlying profit margin expanded from 8.3% to 20.6% in a single year Wise, with management targeting 13-16% medium-term margins (implying substantial reinvestment)

4. Share buybacks: The company used £69.9 million in FY2024 to fund share purchases through its Employee Benefit Trust to cover stock-based compensation, maintaining discipline on dilution

Key Risks to Monitor

1. Regulatory risk: Operating across 160+ countries exposes Wise to diverse regulatory frameworks

2. Interest rate sensitivity: A significant portion of recent profit growth came from interest income on customer balances

3. Competition: While moats are strong, both banks fighting back and fintech challengers pose threats

4. Execution risk: Maintaining quality and speed while scaling rapidly is challenging

5. Currency risk: As a global business, FX volatility impacts results

Investment Thesis Summary

Wise represents a rare combination: a founder-led, mission-driven company with exceptional unit economics, strong competitive moats, massive TAM, and a sustainable 15-20% growth trajectory with ROIC above 25%.

For our investment approach focused on high-quality compounders:

✅ ROIC: 25%+ (well above our 15% threshold)
✅ Growth: 15-20% guided CAGR
✅ Moats: Multiple overlapping advantages (network effects, regulatory, technology, brand)
✅ Market Position: Clear category leader taking share from incumbents
✅ Capital Allocation: Disciplined, shareholder-friendly

Valuation: At 25-28x earnings for a business of this quality, Wise sits in the "fair to modestly expensive" range. It's not a screaming bargain, but for a multi-decade compounder with this profile, it rarely trades at obvious value multiples. Patient accumulation on any weakness toward 20-22x earnings would offer an excellent entry point.

The RBI Raiffeisen partnership isn't just one deal—it's validation of a tipping point where traditional banks are surrendering the cross-border payments infrastructure battle. As more banks follow RBI's lead, Wise's moats widen, its network strengthens, and its path to capturing a larger share of the £11 trillion TAM becomes increasingly clear.

Bottom line: Wise checks virtually every box for a quality compounder worthy of a core portfolio position for investors with a multi-decade horizon. Right now it sits on my watchlist, which you can access in real-time in our community.

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