Fintech unicorn Zepz, owner of WorldRemit, makes up 26% of the staff

Zepz, which owns the WorldRemit and Sendwave brands, totals approximately 1,600 employees.

Soba photos | Light Rocket | Getty Images

Money transfer group Zepz has laid off 420 employees, the company told CNBC EXCLUSIVELY, as the fintech sector grapples with a challenging macroeconomic environment.

The London-based company began reporting layoffs to staff on Monday, with individual staff told by their managers before larger communications are issued. By Tuesday, the entire company had been told of the move.

Zepz, which owns the WorldRemit and Sendwave brands, has a total employee count of about 1,600, which means cuts translate to about 26% of its workforce.

The company said the cuts will primarily affect Zepz’s customer care and engineering teams as Zepz looks to shift those operations from multiple countries to more centralized hubs.

The company is headquartered in London but has regional offices in the United States, Canada, Australia, Hong Kong, Poland, Kenya and abroad.

Zepz said it is implementing what it calls “workforce optimization” to account for roles that have been duplicated after bringing together Sendwave and WorldRemit under a single parent company.

Collectively, the two money transfer services are used by more than 11 million users in 150 countries. Zepz acquired Sendwave in 2020 for an undisclosed amount.

This is the second time in just under a year that ZipZ has laid off employees. In June 2022, Zepz implemented layoffs affecting about 5% of its workforce, according to Sky News.

The decision represents “an important and necessary step in transitioning from two large teams divided into one dynamic organization within Zepz, and lays the ambitious foundations towards our long-term strategic direction as a portfolio business,” said Mark Lienhard, CEO of Zepz.

See also  NASA and Boeing say preparations are continuing for the Starliner's July test flight

He added that the company took the decision to reduce its number of employees due to the need to streamline its structure rather than the pressures of the macro economy.

“Over the past year, we’ve taken a serious look at how we can improve the organization to continue to expand in a mature way that sets the company up for long-term success,” he said.

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

Support will be provided to employees in the form of advice, training, job placement, CV development, job applications and interviewing skills.

Despite the job cuts, Zipz said it still employs 200 jobs.

The company enables users to send money abroad from a smartphone or computer with people on the other end being able to receive it into their bank accounts, via cash, to a mobile wallet, or as a mobile top-up.

The service is a challenge to established money transfer services such as Western Union, which tout cheaper fees and the ability to transfer money quickly. A close competitor is Wise, which claims to offer cheaper international money transfers than banks.

Fintech companies like Zepz face a host of challenges including more cost-conscious consumers and increased regulatory scrutiny. These have affected the value of the various companies in the sector – in both the public and private markets. Funding has dried up and many fintechs have taken valuation cuts.

Even legacy banks have struggled to gain traction in the market, with Goldman Sachs recently backing away from its fintech ambitions.

See also  Wall Street closed lower in Apple shares and bank shares

Zepz last raised cash was in August 2021 at a $5 billion valuation when it announced $292 million in new funding from investors led by hedge fund Farallon Capital. The startup is backed by leading venture capital firms including Leapfrog, TCV, and Accel.

Zepz has long been a darling of the UK fintech scene. It was founded in 2010 by British-Somali businessman Ismail Ahmed, who started the company after moving to the UK after fleeing civil war-torn Somalia.

Ahmed’s idea to create Zepz, and then WorldRemit, stemmed from his own experience moving money across emerging markets; He was transferring money back to his family, who then lived in a refugee camp in Ethiopia, but the transfers were very expensive and took months to complete.

Ahmed stepped down as CEO of Zepz in 2018, though he remains on the board as a non-executive chairman. His replacement at the time was Bryon Corcoran, an Irish businessman who previously led British bookmaker Paddy Power Betfair.

In 2022, Corcoran was replaced by Mark Lienhard, a former executive at bill payments company Bill.com, whose hiring reportedly came as the company’s IPO prospects waned.

Zipz “has never announced an IPO timeline and does not plan to announce exit plans at this time,” Lienhard said. He said the company achieved operating profitability in the first half of 2022, adding that it is “on a sustainable path to increase profit margins.”

Leave a Reply

Your email address will not be published. Required fields are marked *