Measuring Transparency at TransferWise

Analytics

Written by: Akshay Menon

TransferWise is a mission driven company, and everything we do is to make money without borders — instant, convenient, transparent, and eventually free.

We review our progress towards achieving the mission through tracking our Mission KPIs. Out of the four pillars mentioned above, transparency is a particularly tricky one to measure.

A transparent market is one where banks and providers show their fees transparently. Traditional banks and international money transfer services often hide their fees for cross border transfers, usually as an exchange rate markup. This is one of the key problems TransferWise wants to solve.

Being transparent is the right thing to do. But we aren’t transparent just because we believe that we have a moral obligation to do so.

Campaigning for transparency in the old days

When consumers understand exactly how much they are paying, they may begin to shop around, and that may result in growth for TransferWise. But more importantly, that means a fairer deal for consumers.

You move what you measure. If transparency is an important value for us, then we need to quantify it and measure our progress against it, to ensure that we are working on the right things.

Within our mission updates we had tried to include a transparency index which tracks the number of banks around the world showing fees transparently. If this is moving in the right direction, that means more consumers are shown the actual fees they are paying — and that gets us closer to our mission.

An early attempt at calculating transparency index circa 2018

We’ll explore a couple of ways to drive transparency in a market, and how we are measuring their impact.

  1. We can build comparison sites that show consumers how much money their bank is hiding in hidden fees if they persist in not being transparent.
  2. We can try to increase consumer awareness of the fees hidden in exchange rates by running educational ad campaigns.

In the rest of this post we’ll evaluate how we measure the impact of these initiatives.

TransferWise comparison tool

If banks aren’t showing their fees clearly, we can calculate what exactly their customers are paying and show it to them. This is what our comparison team does. Every hour our team logs on to hundreds of bank accounts around the world and calculates the price to do a transfer and stores the fees in a database.

This obviously doesn’t move our overall transparency score, but it helps our customers make more informed decisions on which provider they should use.

We also don’t hide it if a competitor has a better deal for the customer

However, a classic question in our comparisons team is — what’s the quantifiable impact of showing the comparisons? When the team needs to make a tradeoff (which is always) on where to invest resources, how do they decide if this is the most important thing to work on?

One way is to measure the incremental uplift in conversion (and number of users converted) after seeing the comparison data versus without seeing it. Another could be to track retention for cohorts over time.

We found that data from such experiments tells us a part of the story. But it is hard to measure, and is dependent on various factors such as the magnitude of the hidden fee, and whether the customer uses that particular bank.

Data is not everything — product work is as much art as science, and if you wait till you have data for every decision you make, chances are you won’t ship much. Talking to customers and building an intuition on what is valuable for them, and using data to validate your intuitions is a better way here.

We’ve talked to enough customers to know that showing comparisons helps them make more informed decisions, and the impact in terms of new users to TransferWise doesn’t fully capture the value in doing this.

Bottom line — if you have conviction on what the right thing to do for the customers is, then don’t worry too much about not being able to measure it. Or rather, not having perfectly accurate metrics should not stop you from building the right things.

Banks often sneak in hidden fees in the fine print. This is not being fair to the customers, and technically is illegal in the EU now per the new Cross Border Payment Regulation (CBPR2) — a regulation we campaigned hard to make happen.

Obviously hidden fees are a problem we want to fix. Now say we want to do a campaign to increase awareness on the issue. In terms of conviction, we know that this is definitely the right thing to do.

But how do we decide on the amount of money we are okay to spend here?

One approach would be to decide what exactly we are hoping to achieve via this campaign. Increase transparency, sure, but are we hoping that more folks will trust us now and use our product? Or is it going to be aimed at existing customers, in which case the volume or frequency per user might increase? Maybe even retention?

We are really prudent with our marketing funds — that money isn’t our money, but our customers’ money that we are investing on their behalf. We want to be sure that we are getting a return on it, so we calculate the expected impact and see if it generates a return.

For example, if we are hoping to get more users via this campaign, how many? We could work backwards from the total addressable market and apply conversion rates at each step of the funnel to arrive at an expected new user number — and then apply the LTV applicable for the expected user segment to get a sense of how much we can spend. Something like:

(Audience * Conversion) * LTV > Investment

Robustly calculating the return gives us the confidence to invest more.

With abstract concepts like transparency, the first step is to define precisely what you mean when you use the word. For us, it means a transparent market, where banks and providers show their fees transparently. Once you have this you can build a KPI to track your progress towards this.

When figuring out how much to invest in a KPI like transparency — the answer is part art and part science.

The art lies in talking to customers to figure out what matters to them, and in doing something because it’s the right thing to do. The science is about understanding the impact and expected returns and checking if we are getting an appropriate return on our customers’ money.

P.S. Interested in working with us? We’re hiring! Check out our open roles here.