At our recent 2023 AGM, Square Peg Co-Founder and Partner, Paul Bassat, sat down with Airwallex Co-Founder, Lucy Liu, to talk about her journey of growing the company from an emerging fintech startup into a multi-billion dollar company. During the conversation, they discussed what advice Lucy would give herself if she were starting the journey again, the competitive landscape within the fintech space, and what separates Airwallex from other large fintechs.

PB: If you were giving yourself advice now based on what you know, what would be the advice you’d give before starting on the journey? 

LL: There were so many things that we avoided in the early days because we thought that we were a startup and we didn’t want to be a traditional big corporate business. But we ended up having to do many of these things as we grew bigger, such as setting up specific teams. While we initially struggled to create that organisational structure, we were glad we had that in place going into COVID-19 and all the other challenges that come with a growing business.

PB: What got you all started 6-7 years ago?

LL: We knew we wanted to do something cross-border and in foreign exchange, because of the inefficiency within the market specifically in the business space. We knew we wanted to do something global, but that was about it. 

PB: It is a simplistic view, but it feels that in fintech, companies start life focused on their own niche and have few competitors but over time everyone competes with everyone. Tell us a bit about that journey from where you started with your initial vision to where you are now.

LL: When we first started, we were probably the only company that was focused on FX and paying outside through local rails. We’ve achieved that so 93% of payments on Airwallex happen through our own rails rather than SWIFT. We were very focused on making that infrastructure our superpower, whereas everyone else was on the acquiring side.

Each fintech has its own strengths. I think our strength has been solving the complexity of the APAC market, and that’s something a lot of European and US companies haven’t really figured out. 

We’re giving modern businesses a convenient and cost-effective way to grow without the restrictions of the traditional financial infrastructure. 

To give an example of this, think about the different currencies we have within this region alone and the different methods of payment. Within the payments space, primarily for acquiring, it used to be just Visa, Mastercard and AMEX. Currency wise, there were the major ones such as the Euro and USD. However, we have lots of restricted currencies and capital controls across Southeast Asia and China. So getting that all figured out took a lot of time, and I think created a very high barrier to entry from other companies. 

It’s similar to our relationships with banks. We’re partially competing with their business banking but at the same time, we’re working with their transaction and institutional banking departments. And it’s like that with other fintechs as well. However, the market is big enough and is expanding so I think that we have a fair bit of competition and collaboration to do before the market dries up. 

PB: There’s a category of business today that didn’t exist 15 years ago - digital-first, global-first SMBs. Their needs are very different to a traditional small business. Tell us a bit about your suite of products that meet the needs of these customers. 

LL: Airwallex will take care of all of your financial operations needs as if you were an enterprise. We can help you open accounts almost anywhere in the world, in all the currencies you want. We’ve also found that for global businesses, even from day one they need more complex solutions to what they currently have. I’ll take Airwallex as an example. In the early days, my experience managing finances for Airwallex was challenging. As we were growing the business, we had ten different entities with 20-odd banks so I always had a bag full of tokens all with different passwords. However, with Airwallex, you have one account that you log into to access all these different entities and accounts.  

If you’re trying to sell products on Amazon across the US and Europe as another example, you would need two different bank accounts because they only do local settlements. That would show up as one part of the Airwallex dashboard, but you would have two different local accounts that you could draw money from. If you think about that for a more complex company, some of our clients have hundreds of Amazon shops.

PB: You are building a strong SaaS offering. What is your strategy? Why are you the logical player for your customers to have relationships with for these sorts of products? 

LL: Interestingly, we’ve found that we were able to provide these SaaS products and now white label them to other SaaS providers so they can do embedded finance, meaning that it ends up being Airwallex anyway. I think our strength is that we can grow with businesses - we can go from one-person businesses all the way up to multi-billion dollar companies. In some cases with SaaS, you either end up being in the SME category or hardcore API category where everything is customised. It’s very hard to have one product that is fit for SMBs and enterprises.

PB: Talk about the dynamic between you and your Co-Founders. How does it work?

LL: We have a very clear split of responsibilities. Communication-wise, we learn as we grow, and one of the biggest things we’ve learned as Founders is that we need to grow with the business. That means sometimes letting go of some responsibilities we were previously in charge of and slowly hiring really smart people to take over. This was true for all of the Co-Founders, so we could focus on the bigger picture and more strategic side of things. This was because, at the beginning, it was so intuitive what we wanted to do next. The product roadmap was full and we had so many things to do for the next 3-5 years. However, now we need to be more thoughtful about what we prioritise next. 

PB: Are you enjoying this current phase of Airwallex’s growth more or 6-7 years ago when you were going all out and trying to find product-market fit with a small team? 

LL: I think both are pretty good. I’d say that the middle part was where we struggled the most, around the time when we were growing from ~$150K to $400K in revenue in 18 months. But I think that we have a startup mentality no matter how big we grow, so that’s good. Also, we can create internal, little startups to tackle new challenges. 

PB: Where do you see Airwallex in 5 years? 

LL: We want to have revolutionised fintech’s place within the broader market. People probably still think of banks today, but we want fintechs to have taken over banks, with at least an 80-20 split. We’re really for modern businesses, and we think that people should be able to access all of the benefits fintechs provide without needing to physically walk into the bank. We’re building a generational company, where with or without founders, the business will continue to grow and outlive us. It’ll be great to also see new Founders coming out from Airwallex. 

PB: What do you think is the differentiator between Airwallex and other fintechs?

We believe, even now, that we have the most comprehensive financial operations product suite on the market, and we are a product-driven company. As opposed to focusing just on constantly expanding customer numbers, we are very focused on product innovation. I think there are many things we can still do in that space, and some of the other players aren’t innovating as quickly as we are. That’s our DNA.