The success of Wise highlights London’s fintech boom – which is built on welcoming talented people

For a few years there has been a quiet message spreading among people needing to transfer money abroad. It is that you don’t go to a bank but go instead to a little company called TransferWise, where you get a much better rate. Now it just changed its name to Wise – and it is a secret no more. It has just been listed on the London Stock Exchange at a valuation of £8bn.

There are at least five stories here: first, the human one. Two Estonians living in London feel they are getting a bad rate from the banks if they send money back and forth to Estonia. Then they realise that one of them is about send some cash one way, while the other plans to send a similar sum the other. So, why not start an online operation that cut out the banks and enabled people to deal directly?

That lightbulb moment about 10 years ago means that Kristo Kaarmann and Taavet Hinrikus are now worth upwards of $2bn (£1.4bn) and $1bn respectively. This is how capitalism is supposed to work. In the words attributed to the 19th-century American poet Ralph Waldo Emerson, they built a better mousetrap and the world beat a path to their door.

Next, there is a story about London’s future as a financial centre. There has been a wall of sound about the impact of leaving the EU, business going to Paris, Dublin, Amsterdam and so on. As it has turned out, the losses so far are quite small; but a much more important issue is whether the city is attracting new types of business, rather than losing ground in established areas.

Companies seeking to go public have tended to go to New York, rather than London; while one that did choose London – Deliveroo – found its shares languishing. It is now 16 per cent up on the launch price at the end of March, but the poor reception suggested to many that London was a bad place to launch a high-tech business. Now, that memory has been expunged, with Wise shares more than 10 per cent higher than at the launch yesterday.

Third, is a key part of the so-called “fintech boom” – using technology to improve financial services and create new ones. This is one of the hottest areas of entrepreneurship, and a really important one for London. Last year, the UK was second to the US in the number of new fintech “unicorns” – new public companies with a value of more than $1bn. But we only had nine, against America’s 36. Third was India with five, and fourth China with four. We need to close the gap.

Fourthly, there is the question of the efficiency of financial services more generally. The mark-up that banks charge on foreign exchange is particularly high for retail customers, though not as high as you find at airport currency kiosks. Large commercial customers can deal very close to market rates, but the rest of us can’t. So Wise is in a sense a democratising force, enabling little people to get as good a deal as the big ones.

It can do so because it does not carry the overheads of a legacy financial services enterprise. There are no marble-lined banking halls or gleaming tower block offices. Its headquarters are on the 6th floor of a former warehouse on east London’s Shoreditch High Street.

The challenge to the rest of the industry is to find ways of giving better services for less money. The entire financial services business has been scrambling to cut costs, as we have seen with the string of bank closures. But there are some areas of business, such as wealth management or pensions’ advice, where it has proved hard to do a decent service at an acceptable cost. And as far as pensions’ advice is concerned, too much of the advice is far from decent; some is downright fraudulent.

The problem is that foreign exchange is essentially a simple transaction, whereas financial advice is an ongoing and complex service. Nevertheless, technology ought to be able to improve things more generally. So we need more people like Kristo Kaarmann and Taavet Hinrikus.

That leads to a final story: how London’s financial service industry has been massively influenced by immigration. To take just three examples, there was Nathan Rothschild, who arrived from Germany in 1798, founded the London branch of the family banking empire, and helped finance Wellington’s army at Waterloo.

There was Sir Sigmund Warburg, who was brought up in Germany, but left in 1934 soon after Hitler came to power, to found SG Warburg & Co and revolutionise City merchant banking in the 1950s.

And there was Michael von Clemm, the American investment banker whose vision and drive turned Canary Wharf from a desolate site in docklands into the present massive financial hub.

The message is that as long at the city continues to welcome talented people from all over the world, it should be alright.