Different people might have different priorities when it comes to business bank accounts.
Some people prefer to walk into old buildings where people in suits and nice hair cuts greet them and help them fill out paper forms. This describes most German people.
Other people might prefer the idea of an online bank with low fees, a cool app and credit cards for all employees. This describes most startup founders.
As you might have guessed, we are in the second camp. One of the things we deem most important is transparency, which means that all employees gets access to our bank account. That way, everyone can see how much money we have and how profitable we are.
(As a side note, this also reduces management overhead. You’re an employee an want to attend a borderline-ridiculously-priced auditor seminar from Tüv Süd for 12k€? Don’t ask me. Check the bank account. I guess we could have the discussion why regulatory seminars are so damn expensive, but let’s postpone that to another day.)
Where were we! Ah. We were talking about priorities for business bank accounts.
This is actually really similar to requirements engineering for medical devices. You see, regulatory consultants love to sell you this idea that when you have a great process for finding out customer requirements, you’ll always build the right product and your business will be successful.
In reality, this proposition is quite flawed as humanity hasn’t (yet) figured out how to repeatedly build successful products, especially software. Coming up with up-front requirements is error-prone, and many requirements only become clear once a product is built.
Just like with banks. Sometimes, the most important requirements only surface when they’ve gone missing.
Like accessing your money.
That’s an important requirement for a business bank account.
As a Wise business customer, it’s sometimes very hard to access your money.
Choosing Wise as our business bank account seemed like a match made in heaven. Their transparency and usability are truly impressive, and those values really match ours. We moved our main business account there. All was well in The Shire.
But dark shadows started looming over Middle Earth when we spent more time together.
It all started when the Wise product team got on a call with me to get feedback for an upcoming feature. For whatever reason, they were really fixated on PAYMENT APPROVALS. Probably some higher-up person told them “you shall go out and build a feature for PAYMENT APPROVALS”, and off they went, on a Google Meet call with me, to build PAYMENT APPROVALS.
Wise person: Alright, we’d like to talk about features for the Wise business account.
Oliver: Sounds great! I’m a big fan of Wise. The two biggest problem I experience are not seeing the subject of SEPA direct debits and changing scheduled transfers.
Wise person: What can you tell me about PAYMENT APPROVALS in your company?
Wise person: How often do you use PAYMENT APPROVALS?
Oliver: Not at all?
Wise person: Would you like MULTI-STEP PAYMENT APPROVALS?
Wise person: What would a good MULTI-STEP PAYMENT APPROVAL WORKFLOW look like for you?
I got the impression that maybe, just maybe, somehow they might be getting their priorities wrong.
That being said, I might not be their typical customer, and the people were really nice and competent at their jobs (seriously). I suppose it’s just some internal corporate chaos (TM) which put them in their unfortunate position of having to ship a feature for PAYMENT APPROVALS. For what it’s worth, I think Wise did ship some sort of PAYMENT APPROVAL feature later.
We don’t use it. We never needed it. But maybe someone else does?
Meanwhile, I still can’t change scheduled transfers, so changing monthly salary payments becomes a game of memory, deleting and re-creating transfers, without making any mistakes (if you were ever wondering what CEOs do all day long, here’s your answer). Also, the subjects for SEPA direct debits are still not visible, so when the tax authorities deduct money from our account, I have to guess which tax we just paid based on the sum. This is both hilarious and sad, because it’s like getting a bank statement where the subjects and descriptions are missing, and you have to guess what you purchased last month based on the sums alone (yeah, good luck).
But I guess there’s also something positive to be said: The remaining aspects of their product were so good that I was still a happy Wise customer - and shareholder!
That all changed on October 3rd, 2023, when our bank account got frozen as part of one of their random checks.
You see, Wise actually started out as a rather transactional service - that’s why it was called TransferWise before it followed the recent trend of “let’s change our company name to something which is really hard to Google”. TransferWise was all about making foreign-currency transfers easy and affordable, and it excelled at that and people loved it.
When you’re a transactional service, two aspects make a lot of sense: Make it easy for users to sign up, and only subject them to KYC (know your customer) checks when they transfer large sums of money.
Note that this is in contrast to how normal banks operate: They do a detailed KYC check up front when opening an account, and don’t subject you to random checks afterwards.
The problem is that TransferWise wanted more. It wanted to become a normal bank account for people - it rebranded to Wise.
Their software and processes, however, continued to behave like the transactional service of TransferWise. Now, with their business account, customers are subject to the worst of both worlds: A detailed KYC check up front, and random KYC checks when transferring large sums of money.
Talking about those KYC checks when transferring money - I wonder what their algorithm for that is, because it really reminds me of a crappy version of ChatGPT with dementia. It goes like this:
OpenRegulatory: Opens Wise bank account in 2021.
Wise: What’s your company about?
OpenRegulatory: Consulting and SaaS.
Wise: Cool, upload your documents and here’s your bank account.
A year passes and lots of small transfers arrive as clients pay us.
Wise: WHAT’S THE SOURCE OF ALL THAT MONEY
OpenRegulatory: Consulting and SaaS.
Wise: PLEASE UPLOAD PROOF AND BANK STATEMENTS
OpenRegulatory: You are our bank? You already have your bank statements?
Another year passes and a dividend should be paid to the holding company.
Wise: WHO’S THAT RECIPIENT
OpenRegulatory: It’s our holding company. You have the documents already.
Wise: PLEASE UPLOAD PROOF AND BANK STATEMENTS
This would be a great plot for a comedy, if it wouldn’t be a description of our main business bank.
KYC checks are fine. The main problem, however, is that they occur randomly and accounts are frozen for “3-10 business days” once these random checks are triggered. And they can only be resolved by the “verification team” which, again, takes 3-10 business days to respond. Sometimes I wonder whether the “verification team” consists of one dude in a dark basement with an elaborate moustache. He might also be the guy who’s pulling all the strings behind the dementia-LLM which randomly freezes accounts in the first place. Who knows.
But I guess this is no place for moustache conspiracy theories. Because our Wise account has been frozen for over two weeks now, and counting.
Will it likely be resolved soon? Yeah, I think so.
Do I hate Wise now? No - I still have a lot of respect for them. Their product, usability and transparency are so good that many (positive!) lessons can be learned from them.
Would I still recommend Wise? Yes! I’d recommend them to anyone who needs to do foreign-currency transfers in the spirit of the “old” TransferWise.
But for people looking for a bank account, I’d recommend to look elsewhere. I’ll be walking into an old building to say hello to the people in suits and nice hair cuts.
Update (Oct 20th, one day later):
Credit where credit is due: Our account is unfrozen and everything’s back to normal.
While I’d love to say we got everything sorted through the normal channels, that’s not the case. It took two Twitter posts, one blog post, one LinkedIn post (this one) and two emails of me reaching out to a few people I knew at Wise. Damn.
And, again, their communication and customer focus were great. A part of me still loves Wise.
It’s just that freezing any business account for >24hrs makes it absolutely non-viable as a business account for.. well, any serious business interested in paying their employees on time. Maybe that’ll improve in the future. In the meantime, we’ll look into moving our main account elsewhere.
I’ve written up a more turn-by-turn summary of the events below with the goal of moving forward and thinking about how things could be improved.
Sequence Of Events
On Oct 3rd, I set up a scheduled transfer for Oct 20th: 25k€ to my holding company which owns 100% of this company, OpenReg GmbH. It’s a dividend payment from our 2022 earnings, so the compliance documentation for that should already have been in place - I uploaded our list of shareholders when creating our Wise account; it’s a rather boring list as this company, again, is owned 100% by my holding company.
However, setting up that transfer, for whatever reason, triggered some mechanism to “freeze” our account. In practice, this meant we couldn’t receive SEPA payments (= invoice payments from customers) and we couldn’t send SEPA payments. Payments with the Wise card and SEPA debits however continued to work, which I really appreciate, because otherwise we had been in much more trouble.
The Wise web UI showed me the dialogue to upload additional documentation. I did make a mistake here which was my bad: I just skimmed it and thought the requested documentation here concerned the transfer I just had set up, i.e. I just need to prove that the the recipient company is the actual owner of this company and that this transfer makes sense from a compliance perspective. What I did not understand was that I should upload a whole host of financial documentation (bookkeeping reports etc.) - again, that seemed outlandish to me, so I just uploaded the shareholder list.
Nothing happened between Oct 3rd and Oct 16th (= 13 days in total). That’s when we got the first review result from the verification team. Before getting into that, here’s what happened in the meantime: We received multiple customer (SEPA) payments which lead to really confusing emails. We got the typical “someone paid you but you need to provide some information to us” email, but clicking the button would lead to the web UI displaying “cool! we’ve got all we need” - without uploading anything. Huh? It actually took me multiple of those emails to realize that those transfers were actually not reflected in our account and that our account had been frozen because of the transfer I set up on Oct 3rd.
On Oct 16th, the verification team review result came in - understandably, the outcome was that the documentation was incomplete. I uploaded the complete documentation shortly afterwards.
Nothing happened between Oct 16th and today (Oct 20th) - that’s another 4 days, so 17 days in total, more than two weeks.
What Went Wrong
Here’s what went wrong in my opinion:
- A verification check with subsequent “account freezing” was triggered for a transfer which wasn’t suspicious at all (transferring money to the owner company which Wise can verify by checking the shareholder list).
- The verification turnaround time was too long - 13 days until the first response, and ended up being longer than that because my uploaded documentation was incomplete.
Thinking about this constructively, here are some thoughts on improvements:
- First off: I of course understand that Wise, as a financial institution, has compliance requirements etc., and that the (verification) steps above are necessary to some degree.
- The elephant in the room however is: Why trigger re-verifications for company accounts at all? Old-school banks do (lengthy) due diligence when opening accounts and then things run smoothly. Or, if there’s a problem, banks proactively reach out to their customers, but they don’t just freeze accounts like that. I’d e.g. be happy to provide more information upfront when opening a Wise Business account. I’d also be willing to provide our yearly bookkeeping reports and sample invoices in a proactive way, if that would remove the risk of getting “randomly” frozen.
- Any “freezing duration” longer than 24 hours disqualifies Wise Business from becoming a main business account for any company (like us). Imagine this happening e.g. on a 25th of a month, delaying payroll by 17 days, i.e. some time mid-next-month. Crazy. My employees would probably show up with pitchforks!
So, what would a perfect product look like? More proactive verification and no “random” freezing of business accounts - maybe only in “compliance emergencies”, and then the turnaround time should be <24hrs.