Western Union rival Zepz lays off 26% of employees as fintech cuts continue

Money switch group Zepz is shedding 420 workers, the corporate informed CNBC completely, because the fintech sector grapples with a troublesome macroeconomic atmosphere.

The London-headquartered firm started informing workers of the redundancies on Monday, with particular person workers being informed by their managers earlier than bigger communications have been issued. By Tuesday, the entire firm had been informed in regards to the transfer.

Zepz, which owns the WorldRemit and Sendwave manufacturers, has a complete headcount of round 1,600, which means the cuts translate to about 26% of its workforce.

The reductions will primarily influence Zepz’s buyer care and engineering groups as Zepz appears to shift these operations from a number of nations to extra centralized hubs, the corporate stated.

The agency is headquartered in London however has regional places of work within the United States, Canada, Australia, Hong Kong, Poland, Kenya, and past.

Zepz stated it was implementing what it known as “workforce optimization” to account for roles that had been duplicated following its mixture of Sendwave with WorldRemit underneath one guardian firm.

Collectively, each cash switch providers are utilized by greater than 11 million customers throughout 150 nations. Sendwave was acquired by Zepz in 2020 for an undisclosed sum.

It is the second time in just below a 12 months that Zepz has laid off workers. In June 2022, Zepz carried out redundancies affecting round 5% of its workforce, in response to Sky News.

Mark Lenhard, Zepz’s CEO, stated the choice marked “an important and necessary step in transitioning from two vast, segmented teams to one dynamic organization under Zepz, and laying ambitious foundations towards our long-term strategic direction as a portfolio business.”

He added that the corporate took the choice to scale back its headcount attributable to a must streamline its construction somewhat than macroeconomic pressures.

“Over the last year we have taken a serious look at how to optimize the organization to continue scaling in a mature fashion that sets up the business for long-term success,” he stated.

“The remittance industry has maintained robust growth despite global economic conditions, and we’ve seen this audience take great measures to ensure their loved ones are supported as costs rise around the world.”

Employees will probably be provided help within the type of counseling, teaching and profession, CV improvement, job functions, and interviewing expertise.

Despite the job discount measure, Zepz stated it’s nonetheless hiring for 200 roles.

The firm permits customers to ship cash overseas from a smartphone or laptop with individuals on the opposite finish having the ability to obtain it of their financial institution accounts, by money, to a cell pockets, or as a cell airtime top-up.

The service is a challenger to established cash switch providers like Western Union, touting cheaper charges and the flexibility to switch cash quickly. A detailed rival is Wise, which claims to supply cheaper worldwide cash transfers than the banks.

Fintechs like Zepz are dealing with a spread of challenges together with extra cost-conscious shoppers and heightened regulatory scrutiny. These have hit the worth of varied firms within the sector — each in the private and non-private markets. Funding has dried up and a number of other fintechs have taken valuation cuts.

Even legacy banks have struggled to achieve traction available in the market, with Goldman Sachs just lately pulling again on its fintech ambitions.

Zepz final raised money in August 2021 at a $5 billion valuation when it introduced $292 million of latest funding from buyers led by the hedge fund Farallon Capital. The startup is backed by main enterprise capital companies together with Leapfrog, TCV and Accel.

“Having hit profitability last year, the Zepz team has been focused on efficient growth and continuing to build a large, sustainable business,” Harry Nelis, a accomplice at Accel, informed CNBC.

“Following the acquisition of Sendwave a couple of years ago, the next stage in the integration of the two companies is to remove the duplication of roles across the brands’ locations.”

“The team’s decision to optimise the workforce, while a difficult one, was important for the business’s long-term growth and we’re confident Zepz will continue to disrupt the industry,” Nelis added.

Zepz has lengthy been a darling of the U.Ok. fintech scene. It was based in 2010 by British-Somalian entrepreneur Ismail Ahmed, who began the corporate after shifting to the U.Ok. after fleeing civil war-torn Somalia.

Ahmed’s thought for creating Zepz, then WorldRemit, stemmed from his personal expertise shifting cash throughout rising markets; he would switch funds to his household, who then lived in a refugee camp in Ethiopia, however the transfers have been costly and took months to finish.

Ahmed stepped down as Zepz’s CEO in 2018, although he stays on the board as non-executive chairman. His substitute on the time was Breon Corcoran, an Irish businessman who previously led British betting firm Paddy Power Betfair.

In 2022, Corcoran was changed by Mark Lenhard, a former govt at invoice funds agency Bill.com, whose appointment reportedly got here because the prospects of an preliminary public providing for the corporate had waned.

Lenhard stated that Zepz “never announced a timeline for IPO and are not planning to announce exit plans at this time.” The firm achieved working profitability within the first half of 2022, he stated, including that it’s “on a sustainable track to increase profit margins.”