Fintech unicorn rewrites forex rules to snag big bank profits

The struggles of a speciality coffee shop run by two budding entrepreneurs in Melbourne lie behind the success of Airwallex, Australia’s newest unicorn, which provides easy foreign exchange transactions for start-ups and other small companies.

In 2015, computer engineer Jack Zhang and architect Max Li opened a coffee house in Melbourne’s high-rise Docklands district. Looking to cut costs, the two decided to import cups and labels from China but hit an unexpected wall: the costly and gruelling cross-border payments system.

While Western Union and other financial services companies slapped 5 per cent fees on each transaction, the numerous intermediaries along the way sapped time and energy.

“One transaction was $15,000 and we had to pay $600 in foreign exchange fees,” Mr Zhang recalled. “This doesn’t make sense.”

At the time, Mr Zhang was also working full-time as a developer of foreign exchange software at ANZ Bank. He saw how corporate clients paid less — and did less — than smaller companies in cross-border, business-to-business transactions.

This inspired Mr Zhang and Mr Li to launch another business that focused on providing simple, less-costly foreign exchange and international payment services to internet companies as well as small and midsized enterprises.

Partnering with three alumni friends from the University of Melbourne, Airwallex was born. “We make foreign exchange much easier by innovating upon the underlying financial infrastructure,” said Mr Zhang.

Three-and-a-half years later, Airwallex has grown from a five-member team to a thriving company with more than 260 staff in eight offices spanning Australia, China, Hong Kong, Singapore, the UK and the US. The company’s client list includes nascent start-ups as well as giants such as Tencent, JD.com, Ctrip and Mastercard.

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Source: Fintech unicorn rewrites forex rules to snag big bank profits | Financial Times