Fintech: HSBC Zings into payments competition with Revolut and Wise
Lex Sokolin
Managing Partner @Generative Ventures | ex Consensys Chief Economist & CMO | Fintech, AI, Web3
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Digital Investment & Banking Short Takes
PAYMENTS: HSBC takes on Revolut and Wise with its international payments app Zing
Global bank HSBC is entering the B2C fintech field with Zing — a new international payments app that launched last week. Zing will initially be available in the UK, regardless of whether you are a HSBC client, and then rolled out globally throughout the year. The payments solution is primarily geared towards migrants and frequent travelers within the UK, and takes on the $8B+ money movement fintech Wise.
It is also fantastic for people teasing enterprise marketing departments, who seem to like product names starting with Z (for Gen Z?), and making corny fintech puns. Microsoft famously failed out with its Zune, and of course there is the payments app Zelle. If we send you $10 through Zing, is that as a Zing? Have you been Zinged? A real Zinger! And so on.
Zing enables customers to hold 10 different currencies in their accounts, including GBP, EURO, USD, and JPY, and the app supports sending money in dozens of additional currencies. To use the app, you enter the bank information of a recipient and send money in their local currency. Users can top up their accounts using open banking, a bank transfer, or a debit payment. Also, EUR wallets come with bank details to enable SEPA payments directly to the wallet — a big benefit for Brits working in Europe.?
Compared to HSBC’s FX offering, Zing is more transparent and affordable. Typically, the traditional banking international money movement products include large FX markups, as large as 3.7% for “free” EUR transfers. With Zing, users can see the exchange rate and conversion fees in the app or on Zing’s website. For instance, a GBP to EUR conversion on Zing charges 0.6% in exchange fees. While much better than the 3.7% for HSBC users, it still ranks below Wise, which charges 0.45% for the same conversion. Topping off the offering is a Visa debit card that will default to using the destination currency but can use any currency in the wallet at Zing’s standard exchange rate.
The launch of Zing showcases HSBC’s continued focus on international payments. The incumbent already offers its Global Money product to existing customers — a fee-free currency service that debuted in 2020, which processed $11B in transactions in 2022.?
With the new app, HSBC joins the ranks of its US counterparts looking to combat fintech competition. Take Zelle, a digital payments fintech launched by JPM, Bank of America, Wells Fargo and others, taking on Venmo, Cash App and PayPal in the US. Despite launching in 2017, compared to 2009 for Venmo and 2013 for Cash App, Zelle moved more cash than the two combined in 2022 . Key to its success has been linking the app directly to US bank accounts, removing the need to fund your wallet periodically, and creating a quicker and smoother overall payments process.?
For HSBC, Revolut and Wise are the big competition in the UK. The launch of Zing has already sent the Wise share price down by 7.6% last week, after an impressive 50% rise in 2023. Revolut also had a great 2023, forecasting a revenue jump of 70% to $2 billion. However, HSBC has the advantage of leveraging existing retail user accounts to streamline the account funding process, a la Zelle, and accelerating its go to market strategy.?
Overall, international payments is a growing space, iteratively modernized by fintechs for an increasingly interconnected planet. The mobile payments market size was valued at nearly $1T in 2022, and it is estimated to grow at a 14.5% CAGR over the next 10 years. While competition is fierce, user experience and cost are at the core of the fintech value proposition. If financial incumbents can adapt their legacy infrastructure to new products and deliver in these markets, as well as provide greater connectivity with existing bank accounts, then the convenience for end-users will be difficult to pass up.
Take the central bank of Brazil’s PIX payments system as an example of a successful institutional B2C product. Since launching in 2020, it has amassed 150MM users due to being simple, fast, and cheap. Another significant factor contributing to its success is the connectivity PIX has with traditional banks and fintechs, making it easy for users to fund their PIX accounts.
If HSBC can make it just as easy to fund new account, and keep prices low, we expect Zing to become a significant competitor in the international P2P payments space. Zelle hasn’t stopped Venmo and CashApp from growing, and Zing won’t hold back the European neobanks, but it could help HSBC evolve into a more customer-centric institution. Further, it could shrink the B2C FX revenue pool by shifting payments volumes into a much lower price point.
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Web 3.0 ? Quant Finance | Stanford GSB
10 个月The business of banking should be connecting people and businesses to ever more efficient sources of liquidity. This business model seems to have gone left with banks refusing to see themselves as platform businesses in the service of the economy, growing into an ever enshrined rent seeking business. In today’s ever so evolving and increasingly digitized world, HSBC might be better strategically placed building something else, but a B2C business.
Founder & CEO at Monetha.io | Affiliate Marketing for Your Brand | Ethically Access User Interests and Preferences to Build Loyalty | Blockchain Visionary | [email protected]
10 个月Very interesting piece, thank you for sharing Lex Sokolin
Helping you make sense of going Cashless | Best-selling author of "Cashless" and "Innovation Lab Excellence" | Consultant | Speaker | Top media source on China's CBDC, the digital yuan | China AI and tech
10 个月So am I the only one willing to bet that Zing will close within a year? Of all the unlikely sponsors for a fintech company, it would be HSBC. As an HSBC client, I feel I have the right to comment and even complain. Their existing banking systems are out of 1995 and if they put half the work into modernizing their digital bank platform as they did building Zing....maybe their clients would like them more? While I'm glad to see them focus on transfers does this mean that their clients will automatically get the preferential rates advertised by Zing? Not likely!
Financial services strategy, product/proposition development | Intrapreneur | Partnerships development | Digital transformation
10 个月Great and accurate review of Zing Lex, hope you are keeping well :)
DER BUNTE VOGEL ?? Internationaler Wissenstransfer - Influencerin bei Corporate Influencer Club | Wirtschaftswissenschaften
10 个月Thank you Lex Sokolin ! Welcome !